The UK government has officially extended the highly popular Enterprise Investment Scheme (EIS) and Venture Capital Trust (VCT) scheme until April 2035, offering a decade-long lifeline to new and young businesses seeking investment.

Originally set to expire in April 2025, the extensions have been hailed as a major victory for the entrepreneurial community and investors alike, preserving key tax relief incentives that have fueled innovation and startup growth across the country.

The schemes, introduced to encourage private investment in early-stage companies, provide substantial tax benefits. Investors can claim up to 30% upfront income tax relief, and capital gains tax is waived on profits made from selling shares. The EIS allows investors to inject up to £1 million per year into qualifying companies, or up to £2 million for knowledge-intensive firms focused on research and development.

Since its launch in 1994, EIS, along with the Seed Enterprise Investment Scheme (SEIS), has directed a remarkable £32 billion into over 56,000 startups, playing a pivotal role in the UK's entrepreneurial ecosystem.

VCTs and EIS: Fueling Startup Growth

VCTs, another key component of the UK’s investment landscape, enable individuals to invest up to £200,000 per year in new shares of early-stage companies via publicly listed funds. In addition to income tax relief, dividends received from VCTs are tax-free, providing investors with even more incentive to back new ventures.

The schemes had initially been set to expire in 2025 under a sunset clause, sparking concerns about a potential slowdown in private investment into UK startups.

Their extension to 2035 was first announced by the former Conservative government in the 2023 Autumn Statement and was confirmed in a written statement by James Murray, exchequer secretary to the Treasury.

Support for Entrepreneurs and Innovation

Murray underscored the importance of continuing to back the schemes, describing entrepreneurs as the driving force behind economic growth. "Championing schemes with proven success is vital in our mission to support the innovators to help rebuild Britain and make every part of the country better off," he said.

The extensions provide long-term certainty for both investors and entrepreneurs, offering a stable platform for early-stage businesses to attract the capital needed to scale. With their track record of success, the EIS and VCT schemes are expected to remain central to the UK’s efforts to foster innovation and job creation, particularly as the country looks to rebuild its economy.

A Decade of Opportunity

For startups, the extension of these schemes to 2035 is a significant win, ensuring continued access to crucial sources of funding that could help thousands of young companies get off the ground. Meanwhile, investors will continue to benefit from attractive tax incentives that encourage them to take on the risk of investing in early-stage businesses.

With over £32 billion of private investment already injected into the UK’s startup ecosystem through EIS and SEIS, this extension ensures that the next generation of entrepreneurs will have the backing they need to innovate, grow, and contribute to the broader economy.

In a business landscape marked by uncertainty, this decade-long extension offers a rare sense of stability, providing a clear signal that the government is committed to supporting the entrepreneurial spirit that drives the UK forward.