Relief and incentives for business investment schemes – What is changing?

The Government is encouraging growth in the private sector, with the aim of increasing productivity by extending a number of tax reliefs and incentives for investment.

In its mini-Budget, the Government outlined the steps it intends to take to drive investment, employment and enterprise.

To help kickstart growth, it is widening the scope of  Venture Capital Trust and tax-advantageous share schemes.  

These changes could help you and your business grow and achieve more.

What schemes are changing?

The Enterprise Investment Scheme (EIS) and Venture Capital Trust (VCT) are both being extended after previous clauses would have seen tax relief for small business investors end by 6 April 2025.

Meanwhile, the Seed Enterprise Investment Scheme (SEIS) funding is being increased from £150,000 to £250,000 and the age limit for the company to qualify is increasing from two years to three.

If you are an investor, the limit on SEIS investments is doubling to £200,000. This means you could claim £100,000 in tax relief per year thanks to a 50 per cent tax relief on investments.  

The Company Share Option Plan (CSOP) scheme is also changing. From 6 April 2023, the value of shares limit is doubling to £60,000.

This scheme can be used by any size of company and allows employers to purchase at a fixed price, with the benefit that they dopay Income Tax or National Insurance contributions on the difference between what is paid for the shares and their actual value.

The Government are making this change so that business have support to recruit and retain talent, without pushing up regular wage costs.

A shares eligibility condition is also being removed so that access to CSOP is wider and aligns with the Enterprise Management Incentive better.

For more information on the Growth Plan, go to GOV.UK.

For advice on this and how it might affect your business, contact us today.