Mini-Budget: Kwasi Kwarteng extends EIS beyond 2025

EIS was due to expire in April 2025 because of a European Union state aid ‘sunset clause’, resulting in investors to call for an extension.

Chancellor Kwasi Kwarteng has announced the Enterprise Investment Scheme (EIS) will be extended beyond 2025 in the mini-Budget.

EIS was due to expire in April 2025 because of a European Union state aid “sunset clause”, resulting in investors to call for an extension.

The scheme provides £1.7bn a year to 3,755 companies and generous tax relief for investors.

The seed enterprise investment scheme (SEIS) has also been widened, allowing firms to raise £250,000 under the scheme — a 66 per cent increase on the previous threshold – and an increase of the gross asset limit to £350,000.

Kwarteng also announced a raising of the age limit on companies raising SEIS investment from two to three years.

See also: How entrepreneurs can qualify and take advantage of EIS and SEIS

The announcement of the EIS extension has resulted in a positive response from the VC community, with Tim Mills, managing partner at ACF Investors, saying: “The chancellor has given UK start-ups a major boost by guaranteeing the future of the EIS scheme… Besides funding, fast-growing companies and their investors need one thing above all else – a consistent landscape of support.

“By providing clarity around this vital source of funding, UK start-ups have a much clearer runway for growth over the coming years. At a time of economic turmoil, the impact of that assurance cannot be understated.”

Palkwalk Advisors’ CEO Moray Wright said the mini budget was a “pivotal moment” for the UK’s high-growth technology businesses, giving confidence to investors to back the UK’s science and technology scale-ups.

Stephen Page, founder and CEO of SFC Capital, said the reform to SEIS, an extension to EIS and making £500m in new funds available for investment in high-tech innovation and fast-growth tech businesses was “all very encouraging.”

“Collectively these reforms are a huge victory for early-stage start-ups and innovation, and a huge victory for angels,” he said. “They will help us double down on reaching our goal of backing at least 100 early-stage companies every year.

“We also very much hope that a significant portion of the new £500m in capital for high-tech and fast-growth investments is allocated to seed-stage investments rather than later-stage VC. This is where intervention is most needed, as we’ve shown in our past two annual reports on the state of seed-stage investment.”

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Dom Walbanke

Fred Mann

Dom is a feature writer for Growth Business and Small Business, focused on matters concerning start-ups and scale-ups. He has also been published in the Independent, FourFourTwo magazine and various lifestyle...

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