Small Businesses Using the Enterprise Investment Scheme Jumps 16%

Record numbers of small and mid-sized businesses looking to Enterprise Investment Scheme for funding

Small and mid-sized businesses receiving funding through the Enterprise Investment Scheme (EIS) rose a record 16%, with 372 more businesses using the scheme this year than 2011/12.

A report by Chancery Investment Partners (CIP) shows that applications for funding through EIS by small and mid-sized businesses has increased consistently since 2008 but this year’s increase, which witnessed the number jump to 2,718, has been the biggest increase to-date.

HMRC latest data revealed that the amount raised also reached a record high at £1,017m.

EIS is designed to encourage private investment in smaller companies by offering investors generous tax breaks. In 2012 the government reformed the scheme, enabling investors to fund larger businesses with more investment and to receive better tax breaks. The changes included increasing the maximum investment to £1m, staff numbers to 250 and revenue figures to £15m. Additionally investors don’t have to pay Capital Gains Tax on investments held for up to three years and can claim 30% of their investment costs against their taxes.

Gary Robins, partner at CIP, emphasised the benefits of EIS and states why the reforms in 2012 have enabled the scheme to make a bigger impact:

“The new, improved EIS has been a big hit with businesses that would have been too big to use it before. These are well-established, stable businesses that are ready to take their proposition to a bigger audience but who need funding to do that.”

“EIS is helping to fund exciting business growth, creating new jobs and adding a huge amount of value to UK PLC.”

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