Following consultation, the Government will be introducing revisions to the company conditions for SEIS, EIS and VCT companies. In addition, there will be a cap on total investments to be received under these schemes.
The measures are being introduced in line with the new EU State Aid rules and will be introduced in Finance Bill 2015.
The new legislation will introduce the following measures:
- The companies will be required to be less than12 years old when receiving their first EIS or VCT investments, unless the investment will lead to a substantial change in the company’s activity;
- The total investment received under the tax-advantaged venture capital schemes will be capped at £15mn (£20mn for ‘knowledge intensive’ companies); and
- The employee limit for ‘knowledge intensive’ companies will be increased to 499 employees from the current limit of 249 employees.
There currently is no statutory definition of a ‘knowledge intensive’ company and we expect that the Government will introduce this in Finance Bill 2015.
The Government will also remove the requirement that 70% of the funds raised under SEIS must have been spent before EIS and VCT funding can be raised.
This represents additional further complexity to an area which, to be honest, did not need it. That said, the new limits for ‘knowledge intensive’ companies should provide greater impetus to qualifying Companies.