As April is fast-approaching, we are coming closer to the end of the tax year. This is always a busy time for investors and represents a last chance this year to take advantage of tax efficient schemes such as the Enterprise Investment Scheme.
EIS was started in 1993-94 and since then it has helped over 31,365 individual companies receive investment. The scheme has raised over £22 billion for these businesses and there is no doubt that it has contributed massively to the strength of the UK SME arena as a whole. Data for 2018-2019 shows that 3,905 companies raised a total of £1,824million of funds through EIS investments. In the same period, 1,470 companies raising funds for the first time under the scheme raised a total of £504 million.
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.
This year, there is, if anything, more demand from investors for this kind of opportunity and more demand than ever from ambitious entrepreneurs. It is hard to see a way for the Treasury to make such an impact on the economy and growing SMEs, which are so vital to our public finances, outside of the EIS.
In our experience, the businesses that receive this investment go on to grow and create jobs, one of the firms we supported in March has since almost doubled its workforce. This has an obvious impact on public finances in the form of increased income tax revenues and the taxes growing firms pay, and the services they provide.
To find out how IW Capital could maximise your investment opportunities, please contact the team today on 020 7015 2250, or email firstname.lastname@example.org.