Recognition for SEIS, EIS and VCTs, but could have gone further after 30 years of success

The parliamentary Treasury Committee has released its report on Venture Capital. The cross-party report recommends the government:

Extend sunset clauses beyond their current deadline of April 2025
Improve diversity reporting in venture capital
Encourage adherence to the Women in Finance Charter and Investing in Women Code
Consider a government backed venture capital fund, or funds, specifically aimed at promoting greater diversity in venture capital allocation
Extend the ages at which companies can apply for tax efficient venture capital funding
Increase the amount companies can raise under the EIS and VCT schemes

Nicholas Hyett, Investment Manager at Wealth Club commented:

“The Treasury Committee’s Venture Capital report is a ringing endorsement of the UK’s current tax efficient venture capital schemes. Evidence from across the industry and government shows widespread support for these schemes, which have now received cross party, political endorsement.

The report does identify diversity in the sector as an area for improvement. And while there has been progress in recent years, there’s still more to do.

The planned extensions to the age at which companies can raise money under the schemes, and the amounts they can raise, have the potential to help address one of the major challenges facing the UK’s young businesses – transitioning from successful start-ups to global player. In recent times UK companies have often had to turn to overseas acquirers to grow to global scale – depriving the UK economy of the benefits of a homegrown Apple or Nvidia. It’s a particular problem for companies outside the South East – who often arrive at the VC party later, and risk missing out on tax efficient investment under the current rules.

On the sunset clause we would have liked the committee to take advantage of the UK’s position outside the EU to recommend it was scrapped altogether. VCTs and EIS have proven their value over nearly thirty years, and the regular uncertainty caused by repeat sunset clauses is unhelpful.”