Future Retirement Success
  • Politics
  • Business
  • Investing
  • Stocks
  • Politics
  • Business
  • Investing
  • Stocks

Future Retirement Success

Business

EIS investments fall sharply despite tax breaks, raising concerns over regional imbalance and complexity

by May 15, 2025
May 15, 2025
EIS investments fall sharply despite tax breaks, raising concerns over regional imbalance and complexity

Investor appetite for backing high-growth private companies through the UK’s flagship Enterprise Investment Scheme (EIS) has dropped significantly, with new HMRC figures showing a 20% fall in funds raised in the year to March 2024.

Companies secured just £1.6 billion through EIS last year, down from £2.0 billion the previous year and well below the post-pandemic peak of £2.3 billion in 2022. The number of companies benefiting also declined by 10% to 3,780.

Despite generous tax breaks, including income tax and capital gains tax relief for qualifying investors, the EIS appears to have been hit by caution among investors during a year characterised by economic headwinds and interest rate uncertainty.

In contrast, the sister Seed Enterprise Investment Scheme (SEIS) — designed for earlier-stage startups — saw a 25% surge in company participation, with 2,290 businesses raising a combined £242 million. The increase followed rule changes in April 2023 that raised maximum investment thresholds, offering greater flexibility and attracting more early-stage investors.

Across both schemes, the majority of investment continues to be concentrated in London and the South East, with around two-thirds of recipient companies headquartered in the region — prompting calls for greater regional diversification.

Christiana Stewart-Lockhart, director-general of the Enterprise Investment Scheme Association, acknowledged the dip in EIS activity but emphasised the scheme’s resilience:

“The EIS is an important success story and, despite the drop, it still drove more than £1.5 billion of private investment into nearly 4,000 growth businesses. Since their creation, the SEIS and EIS have channelled £34 billion into 59,000 businesses across the UK.”

She added that the association is beginning to see “green shoots” in the form of realised investments and follow-on rounds, suggesting a potential recovery in the coming year.

Mike Hodges, partner at accountancy firm Saffery, argued that now is the time for reform: “Perhaps it is time for an overhaul, especially at a time when government is keen to encourage growth. What’s more, with so much EIS/SEIS money focused on London and the southeast, this is especially pressing for the regions.”

While the government extended both the EIS and the Venture Capital Trust (VCT) scheme to 2035, providing a welcome sense of long-term continuity, some experts argue that simplification is now needed to make the schemes more accessible for both investors and companies.

Introduced in 1994, the EIS allows individuals to invest up to £1 million per tax year — or £2 million in knowledge-intensive companies — with upfront income tax relief and capital gains tax exemptions on qualifying gains. Loss relief is also available for shares held for at least three years.

As the UK looks to stimulate growth and innovation through private investment, attention may now turn to how the government can ensure these incentives reach beyond the capital and into the regional economies most in need of scale-up support.

Read more:
EIS investments fall sharply despite tax breaks, raising concerns over regional imbalance and complexity

0
FacebookTwitterGoogle +Pinterest
previous post
University of Hull launches Railwhere to drive innovation in rail freight efficiency
next post
UK economy posts strongest growth in a year, driven by exports and business investment

You may also like

UK Connect Reveals Innovative Connectivity Solutions to Drive...

October 14, 2024

China’s Economy Faces Deflationary Pressure as Recovery Slows

August 9, 2023

IR35 improvements are still needed as trade body...

April 13, 2023

What Benefits are Available with Cross-Platform Gaming for...

October 23, 2024

Cap on bankers’ bonuses to be scrapped within...

October 24, 2023

Car industry in reverse as output crashes to...

January 26, 2023

Start Up Loans celebrates £70M of loans to...

May 3, 2023

UK private sector growth barely registers in November’s...

December 9, 2024

UK banks pull hundreds more home loan deals...

June 6, 2023

Four new directors for Bank of England board

August 11, 2022

    Get free access to all of the retirement secrets and income strategies from our experts! or Join The Exclusive Subscription Today And Get the Premium Articles Acess for Free

    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • Good Riddance to the Penny

      June 5, 2025
    • Oracle Fusion Testing: The UK Leader’s Playbook for Automation

      June 5, 2025
    • Blue state Republicans threaten rebellion if Senate changes key provision in Trump’s ‘big, beautiful bill’

      June 5, 2025
    • Ricketts, Fetterman team up for crackdown on China’s attempts to purchase US farmland

      June 5, 2025
    • Hamas working to ‘sabotage’ Trump-backed aid group with ‘fake news’: Israeli official

      June 5, 2025
    • Longtime Trump loyalist flips on GOP’s ‘big, beautiful bill’

      June 5, 2025

    Categories

    • Business (8,148)
    • Investing (2,009)
    • Politics (15,529)
    • Stocks (3,128)
    • About us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: futureretirementsuccess.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2025 futureretirementsuccess.com | All Rights Reserved