Treasury mulls EIS crackdown

The Government is looking at ways to stop high earners abusing the tax relief offered by Enterprise Investment Schemes, according to reports.

The Sunday Times reports that the tax-breaks for funding start-ups are being reviewed as part of a wider look at smaller business funding.

The relief targeted at investments in high-risk companies could be reduced, the necessary investment period could be increased above the current three years, or the pool of qualifying companies could be narrowed, sources tell the paper, which says that the results of these considerations may feature in November’s Budget.

Sources tell the paper that relief is unlikely to be removed entirely, though the wider rules could be rightened.

The Treasury declined to comment.

Currently, only companies with assets under £15m qualify for EIS funding, and can receive up to £5m a year in investment. An estimated £15.9bn has been invested in the schemes since the EIS was launched in 1994.

For those companies less than two years old, a separate Seed Enterprise Investment Scheme was opened five years ago, raising around £178m last year.