Business angels could receive considerable tax breaks from Chancellor George Osborne in his Budget announcement on March 23.
Ministers are looking into how they can improve the Enterprise Investment Scheme to make it more appealing to private investors.
The government is planning to “shake up” the scheme, which currently gives angels tax breaks amounting to 20 per cent relief for those investing up to £500,000 in firms with less than £7m in gross assets and fewer than 50 employees.
The precise details of the overhauled scheme are “still to be finalised”, Whitehall sources told the FT, but ministers have been working on the project “for weeks”.
Enterprise Minister Mark Prisk alluded to improvements for angels when Real Business sat down with him earlier this month. In the interview, Prisk told us that one of the headlines schemes under consideration was to see the government to co-invest with angels, similar to the Enterprise Capital Funds model.
Mark Prisk said: “There’s a lot of bureaucracy that doesn’t need to be there. Whether you’re looking at the EIS or some of the VCT rules, we’ve been thinking about how we can best strip those out, particularly some of the rules that relate to the way and the type of people that can invest.
“We think it’s very important to make it simpler and also to attract more people of high net worth to look at this as an area of interest. The chancellor will have more to say about this on March 23.”
Widening the scope of the EIS would be seen a positive move by business. Robin Rowland Hill, corporate associate at Beer & Partners, Britain’s largest business angel network, tells Real Business: “With the bulk of economic growth reportedly coming from the SME sector, which these days is relying on funding from sources other than the banks, it would seem logical for government to do all that it can to encourage early and growth stage investment from better off private individuals into small private companies.”
What are the other measures that Osborne is likely to put forward in the Budget” Check our table of betting odds on enterprise-friendly measures.