EIS Association calls on Chancellor to look to entrepreneurs and their investors to drive economic growth in the fiscal announcement

1 year ago

The Enterprise Investment Scheme Association (EISA), representing entrepreneurs, investors and advisors involved in facilitating private sector investment through the Enterprise Investment Scheme (EIS), is calling on Chancellor Kwasi Kwarteng not to underestimate the role entrepreneurs and their investors can play in helping to drive economic growth post Covid.

Director General of the EISA, Christiana Stewart-Lockhart makes the point that, “The Enterprise Investment Scheme (EIS) and the Seed Scheme (SEIS), are crucial for UK entrepreneurs looking to secure investment into high growth businesses. The EIS is recognised as extremely valuable in ensuring the UK has a thriving start up culture and these world leading schemes play a significant role in driving investment, innovation and economic growth in the UK. Since the schemes were launched, over £27billion has been invested in more than 52,000 businesses.”

As matters currently stand however, the EIS is set to close in April 2025, and without the intervention of the Chancellor confirming an extension of the scheme, many early stage businesses will be starved of the investment that they need to grow, create jobs and contribute in a sizeable way to the economic recovery.

Christiana Stewart-Lockhart adds, “Removing the sunset clause on the EIS now would provide some vital security for UK start-ups. This is especially important for entrepreneurs given the wider economic uncertainty. The country would suffer a major shortfall in the funding currently available from private investors if the EIS was not extended. Already we are seeing the looming sunset clause having an impact on entrepreneurs’ ability to secure crucial investment and we would welcome clarity from the Chancellor regarding the future of the EIS. It is critical that entrepreneurs are given the reassurance that the Chancellor sees the EIS as continuing to play a major part in his plans to build on the entrepreneurial culture in this country and drive economic growth.”

The sunset clause was an EU requirement when the EIS was last renewed in 2015.

End

Notes to Editors

Contact: Christiana Stewart-Lockhart: christiana@eisa.org.uk

Background to the Sunset Clause:
For the last dozen or so years, the EIS income tax relief has been considered to be a form of State aid, and has needed to be notified to the European Commission. When EU State aid approval was last obtained for the EIS in 2015, it was a requirement that a "sunset" clause be included in the EIS legislation. Section 157(1)(aa) Income Tax Act 2007 provides that income tax relief is available for subscriptions for shares under the EIS prior to 6 April 2025. This is colloquially known as the “Sunset clause”. However section 157(1A) goes on to say that “The Treasury may, by regulations, amend subsection (1)(aa) to substitute a different date for the date for the time being specified there”. This gives the Government the power to extend the Sunset clause by secondary legislation beyond 5 April 2025.

The EISA is the official trade body for the Enterprise Investment Scheme. EISA is a highly effective not-for-profit organisation whose core aim is to help Small and Medium-sized Enterprises (SME’s) obtain the funding they need to grow their business and help drive our economy forward.

Attached Media

About EISA

Enterprise Investment Scheme Association (EISA) is a not-for-profit organisation that helps Small and Medium-sized Enterprises (SME’s) obtain the funding they need to grow their business and help drive our economy forward. EISA membership represents all areas of the EIS/SEIS industry including EIS/SEIS Fund Managers, Lawyers, Accountants, Tax Advisers, Corporate Financiers, Financial Planners and Wealth Managers, throughout the UK.

Press Contacts

Christiana Stewart-Lockhart

Director General

020 8132 6199

christiana@eisa.org.uk