VCTA welcomes APPG for Entrepreneurship’s recommendations to government on future of VCTs
The Venture Capital Trust Association (VCTA) today announces the launch of a briefing paper, developed by the All-Party Parliamentary Group (APPG) for Entrepreneurship in partnership with the VCTA, highlighting the vital role that Venture Capital Trusts (VCTs) play in supporting early-stage UK companies, alongside the Seed Enterprise Investment Scheme (SEIS) and Enterprise Investment Scheme (EIS).
The briefing paper aims to improve awareness and understanding of the tax reliefs available to investors in VCTs, EIS and SEIS to compensate for the increased risk associated with investments in start-ups and early-stage businesses so that Parliament is well informed ahead of the planned extension of the schemes beyond the 2025 Sunset Clause.
The paper includes a series of topline recommendations to the government in light of the uncertainty surrounding tax relief schemes, which include:
removal of the Sunset Clause for EIS and VCT so both schemes become evergreen, providing much needed clarity to early-stage businesses requiring future investment
reviewing and updating financial health rules to ensure that they are suitable to the nature of growth investment and worthy companies are not disqualified from funding.
Will Fraser-Allen, Chair of the VCTA, added:
“We strongly welcome these timely recommendations made by the APPG for Entrepreneurship. The UK has a thriving start-up and early-stage business ecosystem and comfortably punches above its weight in VC investment, ranking third in the world behind the US and Japan.
“We are encouraged that the government has expressed its long-term support for VCTs, and will work in partnership to seek the further clarification needed to address any uncertainty which still persists.
“The VCTA will continue to engage in positive dialogue with the Treasury and other stakeholders to ensure those entrepreneurs who rely on equity capital to fuel their businesses’ growth continue to receive the funding they need, as well as delivering value for end investors, whose capital is used to such great effect.”
The paper highlights well-known success stories funded by the schemes, including household names such as Brewdog, Gousto and Oddbox, as well as showcasing the vital role VCTs play in supporting UK entrepreneurs who would otherwise struggle to secure funding through traditional means.
