Chancellor George Osborne is set to announce a tax break worth over £100 million for entrepreneurs who are willing to invest in the UK’s brightest businesses.
The Chancellor will announce an expansion to the Enterprise Investment Scheme, which has already been approved by the European Commission, will increase the 20 per cent tax relief already available to 30, backdated to April of this year, and double the previous investor limit of £500,000 as of April 2012.
Osborne has already stated that: “We want to make the UK the best place to start, finance and grow a business. These changes will increase the tax break for those who take risks in the name of growth and jobs in Britain by investing in small companies that have the potential for fast growth.”
In the current climate of rising unemployment and uncertain growth the government is keen to assist those businesses which could rapidly expand to improve the country’s economic outlook.
Official statistics show that only around 6 per cent of UK companies with more than 10 employees have the right growth potential and have been responsible for creating 54 percent of all jobs in companies of this size.
During the recession in 2008/9 more than 1800 businesses benefitted from the EIS and more than £500 million was raised in investments. More recent figures are not available; however, Cllr Osborne is sure that the move will benefit small businesses by providing an alternative to source of capital to borrowing from banks.
The EC has approved the increased relief under its state aid regulations, and the changes are expected to be announced officially as soon as Parliament returns from recess..