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The European Commission has approved an increase in Enterprise Investment Scheme relief for state aid purposes, as confirmed by HMRC on 6 October 2011.
The income-tax rate of relief has increased by 10% to 30% for investments made in EIS qualifying companies on or after 6 April 2011. The individual investment limit has also increased from £500,000 to £1 million for investments made on or after 6 April 2012.
An EIS qualifying company must still have a maximum capitalisation of £2 million at the time of inception, and is not allowed to raise more than £2 million in any 12-month period from the EIS, the Corporate Venturing Scheme and Venture Capital Trusts. The £2 million limit is, however, due to be increased in April 2012, subject to European Commission approval. If approved, the amount could increase to £10 million, with the increase being implemented within 12 months of the approval date.
The Chancellor, George Osborne, has commented that: “These changes will give a bigger tax break to those who take risks for growth and jobs in Britain by investing in the small companies that have the potential to be fast growing.”
In particular, the enhanced tax break looks set to encourage investment in media enterprises, which is welcome news for those looking to raise finance for media productions.
If you would like further information on the enhanced tax break and how this could impact upon production financing, please contact Jonathan Blair.
Jonathan Blair
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Simkins' early warning bulletins are for general guidance only. Legal advice should be sought before taking action in relation to specific matters. Where reference is made to Court decisions facts referred to are those reported as found by the Court. Please note that past bulletins included in the Archive have not been updated by any subsequent changes in statute or case law.
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