Venture capital tax

Venture capital tax relief: where are we now?

Venture capital tax relief is all about providing early stage finance to new, higher-risk companies, and rewarding individual investors with generous tax relief for doing so.

 

The venture capital schemes were envisaged as time-limited, and given sunset clauses in the legislation. But the position is now changing.

 

The schemes comprise the Enterprise Investment Scheme (EIS), Seed Enterprise Investment Scheme (SEIS), Social Investment Tax Relief (SITR) and Venture Capital Trusts (VCTs). The EIS and VCT schemes were due to expire by 6th April 2025. Instead, they have been given a longer lease of life, and in some areas, made wider in scope.

 

Details to note are as follows:

 

  • SEIS benefits from increased limits from April 2023. These include increasing the amount companies can raise in SEIS investment to £250,000, and doubling the annual investor limit to £200,000. The limit on the age of the company’s qualifying trade increases from two years to three, and the gross asset limit also increases, from £200,000 to £350,000
  • EIS and VCT schemes will now be available beyond 6th April 2025, though it is not yet clear whether a further sunset clause will apply
  • SITR is due to finish in April 2023
  • New admin: there is a new online Government Gateway service for companies to apply for advance assurance on a venture capital scheme. This is to be used for all schemes except SITR. SITR applications should still be made by email or post, with a covering letter and supporting documentation submitted. Advance assurance involves a company providing HMRC with detailed information so that it can give an opinion on its eligibility to use a venture capital scheme. If advance assurance is given, HMRC will send a statement saying the investment is likely to qualify: this can then be shown to potential investors

 

Working with you

Navigating the venture capital scheme rules demands a high level of precision: shares, company and investor must all meet specific criteria for tax relief to be available.

 

Whether you are a business interested in raising external finance, or an individual looking for tax-efficient investment, we would welcome the opportunity to look at the various options with you.

 

What next?

Contact us today if you wish to speak to a member of Gravita’s team about anything contained in this post.

Similar Insights

Estates
Tax
Dealing with an estate after the death of a loved one: A step by step guide
Following the loss of a loved one, there can be a lot to deal with, and having to go through the administrative...
Read More
Deeds of Variation
Tax
Use of Deeds of Variation
Written by Tax Partner, Michaela Lamb In an ideal world, everyone would take tax advice before drafting...
Read More
IHT planning
Tax
Wills, IHT Planning and what the current intestacy rules could mean for those left behind
Intestacy Without a Will (or where the Will is not valid), the assets in your Estate will be distributed...
Read More

Let’s work together on your growth journey

We work with forward-thinking businesses and entrepreneurs who are going places. Let us join you on your journey.