The Treasury Committee calls for the Chancellor to give certainty to small business investors by announcing in next week’s Budget whether tax reliefs designed to stimulate growth will be extended.

The enterprise investment scheme (EIS) and venture capital trusts (VCT) are tax relief schemes designed to encourage investment in small businesses. They provide relief for income and capital gains tax.

The EIS is designed to help small companies grow by offering tax reliefs to investors who purchase their shares. Investors can buy shares in VCTs, who invest in small companies. Both reliefs are due to expire in April 2025.

The Committee has received evidence that the schemes are critical to maintaining investment in early-stage companies, and the lack of certainty around their renewal could damage confidence in investing in the UK’s small businesses.

The MPs call on the Chancellor to provide clarity on the extension of these schemes in next week’s Budget.

It comes as the Committee publishes correspondence from the Chancellor in which he expresses a “firm intention” to extend the schemes, and evidence from the Association of Investment Companies which states that the recent Windsor Framework agreement on the Northern Ireland Protocol removes a potential obstacle to that extension.

Chair’s comment

Harriett Baldwin MP, Chair of the Treasury Committee, said:

“As a Committee, we’ve received a significant volume of evidence on the importance of these reliefs to allow businesses to grow, and for firms to plan for the future. The Chancellor needs to provide clarity and certainty on the future of these pro-growth schemes in next week’s budget.”

 

The Chancellor’s positive response can be found here.