The extensions to the Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCT) announced in the Chancellor's Budget today have been welcomed by the Chartered Institute of Taxation (CIOT).
The extensions to the EIS & VCT cover an increase in the rate of income tax relief to 30% for both schemes from April 2011 and then, from April 2012:
. an increase in the size of company covered to those with fewer than 250 employees and no more than £15m of gross assets before the investment
. an increase in the annual amount that can be invested through both EIS and VCT in an individual company to £10m
. an increase in the annual amount that an individual can invest through EIS to £1m.
John Whiting, Tax Policy Director of the CIOT said:
"We are regularly told by members that the limits on the size of company that can raise money under the EIS make it too restrictive. We are therefore very pleased to see that the Chancellor has heeded calls to raise these thresholds, which will make the scheme much more widely available.
"In many ways, this widening of the eligibility criteria is more significant than the increase in the rate of tax relief."
Notes for editors
1. The current limits on companies qualifying for EIS relief are those with under 50 employees, with no more than £7m of gross assets. The maximum amount that can be raised in a year is £2m; individuals can invest up to £500,000 in a year and receive tax relief at 20%.
2. The Chartered Institute of Taxation (CIOT) is a charity and the leading professional body in the United Kingdom concerned solely with taxation. The CIOT's primary purpose is to promote education and study of the administration and practice of taxation. One of the key aims is to achieve a better, more efficient, tax system for all affected by it - taxpayers, advisers and the authorities.
The CIOT's comments and recommendations on tax issues are made solely in order to achieve its primary purpose: it is politically neutral in its work. The CIOT will seek to draw on its members' experience in private practice, government, commerce and industry and academia to argue and explain how public policy objectives (to the extent that these are clearly stated or can be discerned) can most effectively be achieved.
The CIOT's more than 15,000 members have the practising title of 'Chartered Tax Adviser' and the designatory letters 'CTA'.
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