EISA Reviews 2022 and Sees 2023 as Key For Levelling Up
2022 was a year of recognition of the value of the Enterprise Investment Scheme.
EISA’s engagement with the Treasury Select Committee through the Venture Capital and Tax Relief inquiries over the summer provided an opportunity to emphasise the huge importance of the EIS and SEIS for start-ups in the UK.
These schemes have played a crucial role in ensuring that the UK is one of the best places in the world to start a business, attracting entrepreneurs from all over the world.
The inquiries also allowed the EISA to emphasise the importance of clarity around the 2025 EIS sunset clause, as well as how extending existing SEIS limits could enable the schemes to further contribute to the levelling up agenda.
The EISA was delighted to see the Government commit to extending the EIS beyond the 2025 sunset clause in both the mini budget and Chancellor Jeremy Hunt’s November Autumn Statement. The reassurance that the EIS would continue beyond 2025 was critical for entrepreneurs and investors looking to plan ahead. The announcement that the SEIS would also be extended in line with EISA’s recommendations is also expected to have a significant impact on investment into start-ups, particularly outside of the South East.
Further endorsement of the schemes from the Opposition in their ‘Start Up and Scale Up Report’ in December reinforced the value of the SEIS and the EIS in supporting UK growth businesses.
As we start 2023, the cross-party support for the SEIS and the EIS provides entrepreneurs with some much-needed security at a time of significant economic disruption.
The Prime Minister’s 4th January speech outlining his priorities for 2023 highlighted that the government was ‘making sure entrepreneurial and fast-growing companies get the finance they need to expand… Spreading a culture of creative thinking and doing things differently across every part of the UK.’ The EIS and SEIS are absolutely key to this and it is significant that both the Conservatives and Labour have recognised the importance of these schemes in recent months.
Latest data from HMRC indicates that during the 2020/21 year, 3755 companies raised a total of £1,668 million of funds under EIS and 2065 companies raised a total of £175 million of funds under the SEIS.
The priority is now to increase investment through the schemes in the regions, bringing the Levelling Up agenda to the fore, as use of the schemes is currently concentrated on the South East.
Education is central to raising awareness of the existence of these schemes and the EISA undertook a series of roadshows during 2022, highlighting business successes across Edinburgh, Manchester, Bristol, Cardiff, Belfast, and Liverpool. Each location witnessed ground-breaking businesses which had been built with investment from the private sector through the SEIS and EIS. Many of these businesses believe they would not have secured the vital investment, enabling their significant growth, without the schemes.
In addition, the bi-annual seminars run by the EISA addressing the key issues faced by both investees and investors have continued to be events valued by members of the EISA.
As we look forward to 2023, ‘Levelling Up’ remains a strong focus for the EISA. With a spotlight on the benefits of the EIS and SEIS across the UK, and the extensions to the SEIS limits, we expect to see growth in the use of the schemes by both start-ups and investors across the regions. We expect key regional centres, such as Manchester and Edinburgh, to continue to be strong users of the schemes, but we hope to see these successes replicated across other parts of the UK as the Government drives the levelling up of opportunities across the country.