Carousel_Arrow Chat icon_cookie IHT_trust_wills IR35 Combined Shape 2 Group 10 Login Mobile Menu Share Share Email SubMenuMobile Group 9 VAT View_Gallery View_List capital_allow Triangle 2 Copy Close construction cyberpro employment_tax_shares emplyer_solutions entrepreneurs_corps fee_protect Group 7 grant_fund Group i_Clock i_Consult i_Done i_Eligibility_Tick i_Enter i_Filter i_HMRC i_Negative i_Play i_Plus i_Reset i_Support_Legal i_Support_TaxDesk i_Support_VAT i_Tick noun_marketing_1872083 noun_online_2126759 i_download i_meet Group Copy 24 Group 18 noun_electrical_1240755 copy noun_Technology_2125422 noun_Science_2031115 i_tick_bullet_block international_tax patent_box private_client property_sdlt r_and_d reliefs_incentives Search specialist_tax status tax_indemnity valuation
Markel Tax

13 Mar 2018

Financing growth in innovative firms: EIS knowledge-intensive fund consultation

The objective of this consultation is to look at the capital gap that knowledge-intensive companies face, and to consider an extension to the venture capital schemes to encourage “patient capital”.

Patient capital is defined in the consultation as “long-term investment in innovative firms led by ambitious entrepreneurs who want to build large-scale businesses”. The need for this type of capital has been recognised in recent changes to the EIS and VCT schemes, but the aim here is to look at a new type of fund based on the EIS framework.

Several alternative approaches are outlined in the consultation. The options that are proposed are as follows:

  1. A “patient” dividend tax exemption which would apply after an initial holding period of about five to seven years.
  2. A write off of capital gains reinvested in a fund, similar to the exemption afforded to SEIS investment.
  3. An extended carry back of income tax or CGT deferral, allowing a carry back greater than the one year carry back allowed for EIS relief.
  4. Up-front tax relief allowing for income tax and CGT deferral relief for investment in the fund on the basis that the capital is invested within a specified time frame. Investments would need to be held for a minimum period of three years.

These proposals are at an early stage, but seek to encourage investment in innovative companies that are not expected to produce a return in the short term.

Tagged Tax for entrepreneurs and corporates Employment taxes and share scheme Tax for entrepreneurs and corporates Employment taxes and share scheme
Next article in series

13 Mar 2018

Tackling the Plastic Problem

The Prime Minister launched a 25 year Environment Plan in January 2018 including a pledge to eradicate all avoidable plastic waste by 2042.