Britain's tech companies are flocking to the Enterprise Investment Scheme (EIS). New research from Radius Equity shows a 27% increase in take-up, compared to a year ago. The findings of this survey contrast with recent comments from the CBI among others, that too few elegible firms are taking advantage of EIS, and the scheme should be promoted more widely.
EIS is a government scheme that stimulates investment in small, high-growth companies by offering tax breaks. Firms have to register for EIS and go through an approval process, but investors in approved offerings are entitled to 30% initial income tax relief, and also benefiting from profits free of capital gains tax.
The scheme supports well-established companies entering a period of growth. Qualifying companies can have up to 250 employees and gross assets of up to £15 million. This allows already well established companies to receive investment through the scheme.
According to Radius Equity total of 650 technology companies in the UK said they were planning to use the Enterprise Investment Scheme (EIS) to raise funds. This is 27% higher than the corresponding figure for the previous year and suggests that technology companies now make up the highest proportion of any sector in the UK for businesses using EIS.
“Young tech entrepreneurs are seeing the success of start-ups within tech hubs such as Silicon Roundabout and are wanting to emulate their success. The EIS can help these new start-ups access the right investors and provide the funding that is not available from banks,” said Radius Equity director Gary Robins.
“Local communities up and down the UK are benefiting from this sector’s growth with more jobs and interest in these areas, and the EIS scheme is helping to create these opportunities,” he continued.
“Technology companies, especially FinTech companies’ strong capital growth potential, make them an ideal investment for investors looking to play a part in the UK’s technology sector.”
Radius Equity is a Milton-Keynes based firm that aims of offer tax-efficient investment opportunities to UK private investors. It has a particular interest in telecoms, media, renewable energy and leisure businesses.