The Treasury is understood to be considering plans to stop high earners abusing tax reliefs available through Enterprise Investment Schemes(EIS), according to a report.
The Sunday Times reports the Treasury is responding to accusations that EISs - designed to provide funding for promising UK start-up companies - help wealthy investors avoid paying tax.
Proposals under consideration include cutting the level of tax relief, increasing the period an investment must be held to over two years, and placing greater restrictions on companies that qualify for funding.
EIS qualifying companies can receive investment of up to £5m a year but they must have been operating for under ten years and have assets worth less than £15m.
Some in the industry had feared EISs could be scrapped completely, but sources close to the review said this is unlikely. Instead, the favoured route appears to be tightening up the rules, according to The Sunday Times.
In a response to the Patient Capital consultation, the Enterprise Investment Scheme Association (eisa) said "there is no doubt some EIS money is used in ways that do not adhere to the spirit in which the scheme was created. Perhaps this has gone too far and a wake-up call is needed.
"The wording in the consultation seems to suggest that the government thinks so and may be considering taking action to 'reprioritise' how the current tax reliefs are targeted."
Recommendations are likely to be announced in the budget on 22 November. The Treasury declined to comment on the report.
Since EISs were launched in 1993-94, almost 22,900 individual companies have received investment through the scheme and over £12.2bn of funds have been raised, according to the eisa.
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