Thompson Taraz has welcomed the Chancellor’s Budget announcement regarding the change in the regulatory status of SITR Funds. This is particularly gratifying as Thompson Taraz was involved in shaping this in conjunction with one of our clients who then lobbied the Cabinet Office. Once the regulatory change is introduced, SITR funds will be able to be promoted on the same basis as EIS funds

In addition to this, it is proposed to introduce a new social VCT operating like existing VCTs but whose excluded activities are similar to those for SITR, with investor tax incentives mirroring those for VCTs ie 30% relief on investment, tax free dividends and no CGT on disposals (although no date is given for their introduction)

There are also some minor changes proposed to the various venture capital schemes to align them with the new EU State Aid rules ;-

• companies will have to be less than 12 years old on receipt of their first EIS/VCT investment
• there will be a cap on total EIS and VCT funds a company can receive of £15m (£20m if ‘knowledge intensive’)
• a new employee limit of 499 is introduced for ‘knowledge intensive’ companies

Additionally, the government intend to remove the requirement that 70% of SEIS money must be spent before follow on EIS or VCT funding
All of these changes will be well received, particularly the removal of the SEIS spend requirement which will make it much simpler to launch and manage SEIS/EIS hybrid funds

Note that the timing of the enactment of the various Budget proposals and their effective dates are  likely to be fairly fluid in view of the imminent dissolution of Parliament and forthcoming general election and interested parties should seek corroboration before acting on them