Ahead of the Budget, VCT and EIS managers were worried that Osborne would pare back reliefs and tighten rules after the chancellor commented that VCT and EIS money was not reaching the companies that it should.
Instead, rules have been broadened and tax reliefs increased. EIS funds have seen income tax relief on investments raised from 20 per cent to 30 per cent. The annual investment limit by an individual under the EIS has increased from £500,000 to £1m.
VCTs, meanwhile, will be able to back much larger companies. The annual individual company investment limit has increased from £2m to £10m and the gross assets restriction has been lifted from £7m to £15m. The employee limit has increased from 50 to 250.
“Changing the rules to expand the range of companies that VCTs can invest in is a welcome boost to the sector and businesses desperately seeking finance,” said Ian Sayers, the director general of the Association of Investment Companies.
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