­Start-ups can continue to benefit­ from EIS, SEIS and VCT schemes

The recent approval (issued via a letter to the UK government by the European Commission) to extend the sunset clause on the Enterprise Investment Scheme (EIS), Seed Enterprise Investment Scheme (SEIS), and Venture Capital Trust (VCT) schemes until April 2035 marks a significant step forward for the UK’s startup ecosystem.

This extension provides much-needed certainty for entrepreneurs and investors in the UK, securing the future of these vital funding mechanisms that have supported innovation and growth in the UK for nearly three decades.

These schemes have played an instrumental role in driving the UK’s reputation as a hub for entrepreneurial activity by incentivising private investment into early-stage businesses and start-ups. Through generous tax reliefs, such as up to 30% upfront income tax relief under both EIS and VCT, these schemes mitigate the risks associated with investing in startups, making them more attractive.

The result has been a steady stream of capital into innovative, high-growth businesses, fostering job creation and technological advancements across the UK.

Had the extension not been granted, the sunset clause would have taken effect, potentially leading to the cessation of these schemes, with significant consequences for startups and the broader economy. The absence of these incentives would likely have resulted in a significant reduction in available funding, stifling the growth of early-stage companies and potentially driving investors to seek opportunities in other markets.

With the extension now secured, startups can continue to benefit from these schemes, which are expected to drive further investment, boost patent applications, and contribute positively to the broader EU economy.

Commenting on the news, Corporate Partner, Jas Bhogal, notes:

The extension is great news for start-ups, offering more time for companies to take advantage of tax reliefs and growth incentives. This increased attractiveness to investors will encourage crucial early-stage investment, enabling start-ups to scale more efficiently, drive innovation, and contribute to wider economic growth.

How we can help

Whether you’re pressed for time or find the whole process daunting, as experts in providing start-ups and investors with legal advice, our team of corporate solicitors can guide you through every step of a fundraise using the SEIS, EIS and VCT schemes. We understand that as a busy entrepreneur, your focus is on moving your business forward, so we’ll do the leg work for you and obtain advance assurance and ensure compliance throughout the entire investment process.

You can find out more in our article ‘How to attract funding to your business with the Enterprise Investment Scheme’.