Oxford Capital calls for simplification of EIS rules

More money will be invested in small businesses, creating jobs and growth if The Chancellor makes it easier for people to invest through the Enterprise Investment Scheme (EIS) in The Budget, says Oxford Capital.

Oxford Capital is an active venture capital backer of entrepreneurial businesses, and believes the EIS needs a period of stability, with no further changes to the rules, to encourage investment.

The firm calls for simplicity, writing that the current rules for benefiting from EIS tax reliefs are complex. “Investors need to wait for the investment to be approved by HMRC and then receive an EIS3 form to claim their tax relief.  Oxford Capital believes that more investors would back EIS if tax relief was granted automatically to approved schemes in a similar way that Individual Savings Account (ISA) reliefs are granted.”

Stability is also on their minds: “Recent years have seen a string of changes to the EIS rules which have confused investors and their advisers.  Investment in energy businesses, which made up around 50 per cent of the EIS funds raised last tax year, are no longer available and complex new rules have changed the amount of money which can be invested in a single company.  Oxford Capital believes a period of stability, with no new rule changes will encourage more investors to back EIS.”

David Mott, Managing Partner, Oxford Capital, says: “EIS investments back early-stage companies, potentially creating jobs and growth for the UK economy whilst also offering investors tax-efficient returns.  Successive UK governments have rightly encouraged EIS as an ideal way to support the UK’s enterprise economy.  But many rule changes and complex investment rules are putting off some investors.  We think the time is now right for The Chancellor to simplify the investment process and call a halt to rule changes for a minimum of three years.

“If investing in EIS was as easy as choosing an ISA, we believe more people would be encouraged to invest in exciting growth businesses.  People also need stability in the rules, so that they can choose where to invest their money without the risk that rule changes will suddenly move the goalposts.”