Managers have welcomed Treasury proposals to relax the rules governing VCT and EIS investment.
In last week’s Budget Report, the Treasury says it will consult the industry on changes to the size of companies in which they can invest. These include increasing the employee limit to either 100 or 250, boosting the gross assets limit to £15m before the investment and £16m after, as well as hiking the annual investment limit to £5m for qualifying companies.
Under current rules, investee companies can have a maximum of 50 employees and can only receive £2m from VCTs in any year.
Patrick Reeve, managing partner of Albion Ventures whose VCTs have around £200m AUM, says he is surprised, but delighted by the announcement.
“We are most encouraged by the consultation, especially the inclusion of increasing the number of employees. The current rules are very onerous,” he says.
He is calling for the consultation to include discussions on mitigating inheritance tax by investing in VCTs.
Hargreave Hale chief executive Giles Hargreave says: “If these changes come into force, it would mean we are heading back to a far more sensible regime.
“However, if the Government really wants to make as difference, they should increase the tax relief from 30% to 50%. That really would get a lot more money in and be more meaningful.”
