An interview with John Glencross, CEO of Calculus Capitalby John Glencross / January 26, 2018 / Leave a comment
How has the Budget changed the rules for the Enterprise Investment Scheme and Venture Capital Trusts?
The changes will mainly affect the new tax year 2018/19 and it’s important to highlight that the main tax incentives for investors are staying the same—income tax relief at 30 per cent on both EIS and VCT, no tax on capital gains, deferral of capital gains tax payable on funds subscribed to EIS investments, and tax-free dividends from VCTs.
What has changed is that the Treasury will no longer give tax relief on EIS investments it believes are “capital preservation schemes.” That means tax-motivated, low-risk investments where the main return comes from the 30 per cent tax relief—the Treasury estimates schemes like this accounted for about half the EIS market. Going forward, the money will have to be invested into growing, entrepreneurial companies. This is a definite attempt to focus these schemes in line with the spirit of the original legislation.