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The Business Magazine July 2024
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UK growth set for boost as start-up investment schemes extended

The Business Magazine article image for: UK growth set for boost as start-up investment schemes extended
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6 September 2024
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Two successful government investment schemes are to be extended, benefitting entrepreneurs and start-ups across the regions.

The Enterprise Investment Scheme (EIS) and the Venture Capital Trust (VCT) scheme were both set to end on 6 April 2025 and have now been extended by ten years to 5 April 2035.

The schemes are designed to encourage investment into new or young companies through tax-relief incentives, encouraging innovation, creating jobs and stimulating economic growth.

Exchequer Secretary to the Treasury, James Murray, said: “Startups and entrepreneurs are a driving force for greater investment, more jobs, and economic growth in the UK. By extending these schemes for 10 years, we are providing the stability and support they need to help us make every part of Britain better off.”

The government hopes that the move will provide the confidence to continue investment into high-risk, early-stage businesses in the UK, supporting long-term growth and the development of their trades.

The British Venture Capital Association, Chief Executive Michael Moore, said: “It is excellent news that the government is moving so quickly. This means that investors can now focus on what they do best – investing, safe in the knowledge that these schemes now have the long-term security needed to drive investor confidence.

“The BVCA has long advocated for this move as these schemes play a vital role in supporting early-stage companies that have the highest growth potential and crowding in further investment through the growth cycle.

“As the third largest VC market in the world, the UK has proven the success of EIS and VCT, and with many jurisdictions now following our lead, it is vital that the UK retains its competitive edge in a competitive world and this move is a very positive step in that direction.”

Richard Stone, Chief Executive of the Association of Investment Companies, said:

“VCTs invest in the UK’s most exciting early-stage companies. They help entrepreneurs transform their businesses. Extending the VCT scheme until 2035 will allow the sector to raise further capital and invest with confidence. This will ensure VCTs can help the government secure its ambitions to grow the economy, support innovation and create jobs.”

Both schemes offer incentives to investors of up to 30 per cent upfront income tax relief and an exemption from capital gains tax on any profits made after the sale of shares.

The EIS, introduced in 1994, offers tax relief to individuals that invest in new shares in qualifying companies with investors able to invest up to £1 million, or £2 million if the shares are in knowledge-intensive companies, which focus on research and development.

Investing in early-stage companies carries a great level of risk, so investors are offered loss relief through the EIS as long as shares are held for at least two years.

First introduced in 1995, VCTs are companies listed on the UK’s stock exchange that invest in early-stage trading companies on behalf of people, enabling individuals to invest up to £200,000 per year in new VCT shares. Dividends received from VCT’s are also tax-free.

Both schemes have already seen significant success with over £41 billion raised through the schemes since the EIS was launched in 1994. The schemes continue to generate vast amounts of investment, with £2.9 billion of funds raised across the schemes in 2022-23 and 1,280 companies using the EIS for the first time over this period.


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Nicky Godding is editor of The Business Magazine. Before her journalism career, she worked mainly in public relations moving into writing when she was invited to launch Retail Watch, a publication covering retail and real estate across Europe.

After some years of constant travelling, she tucked away her passport and concentrated on business writing, co-founding a successful regional business magazine. She has interviewed some of the UK’s most successful entrepreneurs who have built multi-million-pound businesses and reported on many science and technology firsts.

She reports on the region’s thriving business economy from start-ups, family businesses and multi-million-pound corporations, to the professionals that support their growth and the institutions that educate the next generation of business leaders.

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