As we approach the end of the tax year, it is the last chance to take advantage of tax efficient schemes such as EIS. The Enterprise Investment Scheme not only offers income tax relief of up to £300,000, but also gives investors the chance to support the fantastic range of growing and scaling UK businesses in our portfolio.
Since its inception in 1993, EIS has helped 27,905 companies receive investment and has raised over £18 billion for these businesses. There is no doubt that it has contributed massively to the strength of the UK SME arena during this time. It has become a key part of the SME growth landscape in the last 25 years and from the updates and additions that the Government continues to apply, it is clear that it will continue to be a large part of the Government’s plans moving forward into a transformative period for the UK’s economy.
From the perspective of the Government and the Budget, supporting start-ups in this space, and other sectors where high growth potential exists, is well worth the generous tax incentives of EIS and SEIS. This is why there has been a continued drive to back EIS and SEIS as revenue lost from tax is more than made up for by the increased employment, productivity and subsequent revenue. This is not only demonstrated by the 2011 increase in income tax relief, but also the move to raise the limit of investment for ‘knowledge-intensive’ small businesses.
The UK’s start-up and scale up economy contributes £2trillion to the UK private sector, and accounts for 98% of all private sector business. Further to this, SMEs employ around 16 million people around the country, this represents almost half of the employment in the UK. In a week with record lows for unemployment announced, it is easy to see where small businesses fit into economic strategy and budget planning.
This also extends beyond employment today and into the future, as the UK looks to foster an environment in which a tech-giant or world changing innovation can flourish. Knowledge-intensive SMEs, who require an industrial focus on research and development, will be key moving forward with the Government’s plans to grow the tech industry. This is reflected in the increased EIS limit for knowledge-intensive companies of £2million per year, this change has been introduced to provide further encouragement to investors to support IP-rich businesses.
IW Capital is keen to help SMEs that need assistance to plan for the future and find the right kind of investment in order to help them reach the next level.To find out more about IW Capital, or for more information on investment and non-executive opportunities, please speak to a member of the IW Capital team today on 020 7015 2250, or email info@iwcapital.co.uk
