The Enterprise Investment Scheme (EIS) has existed since 1994 as a way to support new business growth by providing investment funds from other, more successful businesses and individuals.
In March this year, George Osborne announced tax relief changes which would affect EIS investors. The change focused on a marked decrease in Capital Gains Tax, making the profit made on any investment worth more. A 30% tax credit for EIS investments also added to the appeal of the scheme.
By investing in the EIS, businesses and individuals post-Budget-announcement would be able to make and save more money than they would have done before.
Interest in EIS since the Budget announcement
Data taken directly from Google shows the growing trend in people searching for EIS has grown significantly over time, with a marked spike in interest around the time of the announcement.
Interest in the term ‘EIS tax relief’ has also grown, as investors seek to learn more about how they can profit from the scheme.
Who benefits from EIS?
The beneficiaries of the Enterprise Investment Scheme fall into two main categories; small businesses (investees) and wealthier individuals/companies (investors).
Small businesses are able to access funding which may have otherwise been unavailable to them – even more so now that Osborne’s changes have ensured more profit and increased savings for investors. What were previously considered investments too risky to make are now satisfactory risks balanced out by greater potential rewards.
Wealthier individuals and companies are able to grow their own investment portfolio and support those businesses which are seeking to innovate and disrupt in their industries, thus aligning themselves with these types of companies. By making investment more appealing, Osborne hopes to further support new business growth, particularly amongst businesses which might otherwise be considered too ‘risky’ .
The government recently released data on the regional split of investments plus data from business information site Company Check shows that London had the highest rate of new business incorporation in the period between 2010-2014, but that areas such as Scotland and the North are growing quickly. The latest updates to EIS may well see investments increase in these areas too.
