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Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCT)

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21 March 2012
Simplification of the rules

The measures announced aim to simplify the rules of the schemes making them easier for companies, VCTs and investors to use.

Proposed amendments:

For EIS:

  • Relax the rules defining when a person is connected to a company through an interest in its capital by disregarding loan capital;
  • Widen the definition of shares which qualify for relief, which includes shares to carry a preferential right to a dividend; and
  • Remove the £500 minimum investment limit;

These changes will apply to shares issued on or after 6 April 2012.

For VCT:

  • Remove the £1 million limit for VCT investment by companies not in partnership.
This change will apply to shares issued on or after 1 April 2012.

Increase to EIS thresholds

Proposed amendments to increase:

  • Employee limit to fewer than 250 employees (currently 50 employees);
  • The size threshold to gross assets of no more than £15 million before investment and £16 million after (currently £7m and £8m respectively); and
  • The maximum amount that can be invested in an individual company, to £5 million (currently £1m)

Subject to approval, these changes will apply to shares in investee companies that are issued on or after 6 April 2012.

Legislation will also increase the annual amount that an individual can invest under the EIS to £1 million and will apply from the 2012-13 tax year.


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