Government CGT Report welcomed by the Enterprise Investment Scheme Association
The Office for Tax Simplification (OTS) Report reviewing ways of simplifying practical, technical and administrative issues in relation to Capital Gains Tax has been welcomed by the Enterprise Investment Scheme Association, the membership organisation responsible for informing the government on incentivising private sector investment into growth businesses.
The Report, issued on the 19 May, specifically comments that ‘….the benefits of the Enterprise Investment Scheme may be particularly important in the current economic climate, where new start-up businesses should be encouraged and also where existing early-stage businesses recovering from the effects of COVID-19 will need new sources of funding’.
The EIS and SEIS Schemes recognised as having supported over 43,000 companies since its inception, raising over £23billion of private sector investment.
One of the key elements of the Schemes is the exemption from Capital Gains Tax on capital profits realised by investors, noted by the PricewaterhouseCoopers LLP 2017, highlighted by the OTS, as contributing to a number of positive macroeconomic benefits such as job creation and productivity gains.
Director General of the EISA, Mark Brownridge said, “The OTS CGT report has hit the nail on the head. At a time when early stage businesses, the drivers of an economic recovery, desperately need funding to deliver on their ambitious plans and growth, every conceivable barrier to them raising funding should be reviewed and if appropriate, removed. The report both acknowledges that such barriers exist within EIS and SEIS and recommends their withdrawal both on the investor and company side. The EIS and SEIS schemes can only be truly effective when they are unshackled from their current constraints and restrictions so the OTS CGT recommendations are a positive step in the right direction and have exponential potential to mobilise private investors and fuel the fire of the current and next generation of UK entrepreneurs”