Budget 21: Missing EIS was a mistake for Sunak
Budget 21: Although numerous measures were brought in during Chancellor Rishi Sunak’s (pictured) Spring Budget speech, IW Capital has warned that missing the chance to provide an extension to the Enterprise Investment Scheme (EIS) was likely a mistake.
Luke Davis, CEO of IW Capital, argued the importance of the scheme in providing stimulation for UK small to medium enterprises in the run up to today’s Budget announcement.
Davis said: “Overall, the Chancellor’s Budget will be welcomed by many, especially among business owners.
“The increase in spending is a strong step in the right direction and is something that is sure to attract investment into businesses, but unfortunately not into those who need it most.
“Although an extra £5bn of support has been directed towards the struggling sectors such as hospitality and retail, this is only a short-term fix.
“What we were hoping to see was an extension to the Enterprise Investment Scheme to help encourage SME investment from private sources.
“Increasing income tax relief from 30 to 40% for EIS could provide a 10x return on investment and would increase the appetite to invest in growth sectors, which furthermore would create jobs, boost recovery and enable future growth.
“Previously through the scheme, over £22bn has been raised for small firms in the UK from private sources, providing over 31,000 companies with vital growth finance.
“When the scheme was extended in 2011 – increasing income tax relief from 20 to 30% – the amount invested increased by 87%, providing an extra £472 million of finance.
“A similar jump would provide £1.5 billion of extra investment at an extra cost of £150 million to the treasury.”