Hope for SMEs as MPs support extension of the Enterprise Investment Scheme in latest report

MPs have urged the government to support SMEs by extending the world-leading Enterprise Investment Scheme (EIS) “as soon as possible”. The Report, by the Treasury Select Committee, found that the lack of action by the government thus far is “damaging”.

The EIS is a government initiative that funnels private investment into early-stage start-ups. Along with the Seed Enterprise Investment Scheme (SEIS), the EIS has facilitated the raising of £30 billion of investment into 52,000 startups. Many successful startups have relied on the schemes to drive their early-stage growth. There is currently a sunset clause on the scheme meaning, unless extended, the EIS will end after April 2025. This would be a devastating blow to UK start-ups.

The Report found that: “The removal of these schemes would negatively impact the UK venture capital market, materially limiting the support to entrepreneurs to help establish and grow their businesses.”

The Committee has called on the government to: “Extend the EIS and VCT (Venture Capital Trust) sunset clauses beyond April 2025 at the earliest opportunity. HM Treasury should provide more certainty for founders and investors alike by announcing the length of the extension and a clear timeline for implementing it as soon as possible.”

Christiana Stewart-Lockhart, director general of the EIS Association welcomed the recommendation adding that, “Small businesses are the lifeblood of the UK economy and investment through the EIS is critical to their growth. We welcome the Committee’s recommendation, and it is crucial to provide entrepreneurs with a degree of certainty at an already very difficult time economically. These schemes are driving innovation and creating a brighter future for businesses throughout the UK.”