Chamber welcomes Government decision to extend start-up investment schemes

Business leaders in Greater Birmingham have welcomed the Government’s decision to extend two leading investment schemes aimed at start-ups.

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.

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.

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.

Raj Kandola (pictured), director of external affairs at the Greater Birmingham Chambers of Commerce, called this move as a step of confidence in the right direction.

He said: "It's pleasing to see the Government has taken the decision to extend the Enterprise Investment Scheme - a pragmatic step which will offer investors’ confidence in the long term.

"As set out by the Business Commission West Midlands, driving innovation and investment needs to figure highly on the agenda if we are to raise growth and productivity levels - we hope the Government will look at simplifying similar schemes and broaden the eligibility criteria in order to boost firm level investment.

"Despite the fiscal challenges we are facing as a country, we hope the Chancellor uses the upcoming Autumn Statement to set out a plan to prosperity which will champion investment and ultimately drive business confidence.

"We will spend the coming weeks engaging with our Patrons and Chamber Council to understand and champion the needs and priorities of local businesses ahead of the set piece statement."

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Chamber Council is responsible for steering the work of the GBCC’s Policy team and meets on a quarterly basis to discuss the latest national and regional political developments. Once elected, members can serve up to three consecutive three-year teams.

Members of the Birmingham division of the GBCC are eligible to vote and have until 5pm on Friday 20 September to select their 11 preferred candidates.

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