Funding raised for the enterprise investment scheme over the 2013 to 2014 tax year reached the £1.5bn mark, according to figures from HM Revenue & Customs.
Revised data for 2013 to 2014 shows that the amount of EIS funding increased by more than £500m since 2012 to 2013 when 2,470 companies raised just over £1bn.
Data also revealed companies raising funds for the first time under the scheme raised a total of £872m (revised from £840m previously) compared with £576m in 2012 to 2013.
EIS was introduced in 1994 to help smaller, higher-risk trading companies to raise finance by offering a range of tax reliefs to investors who purchase shares in those companies.
Since 1994, over 22,900 individual companies have received investment through the scheme and over £12.3bn of funds have been raised.
The Seed Enterprise Investment Scheme (SEIS) was introduced in 2012 to complement EIS by offering tax relief at a higher rate than EIS, therefore helping to combat the difficulties very early stage companies face in attracting investment.
In 2013 to 2014, more than 2,000 companies received investment through SEIS and £168m of funds were raised (revised from £164m previously).
This compares with 1,165 companies raising a total of £87m under SEIS in 2012 to 2013.
More than 1,750 of these companies were raising funds under SEIS for the first time in 2013 to 2014, representing £152m in investment.
John Thorpe, business line manager for EIS at Octopus Investments, said HMRC’s figures show the increasing appeal of the EIS as part of a well-balanced investment portfolio.
He said: “With legislation soon to come into force to further restrict the annual and lifetime pension allowances, we believe EIS will become increasingly attractive to thousands of investors who are prepared to accept the high risks associated with smaller company investment.
“Indeed we believe that investor demand may outstrip supply this year.
“We recognise that EIS also represents a critical source of funding for many thousands of small companies, who in turn provide significant economic growth and job creation.”
Statistics from enterprise investment scheme investment firms Deepbridge Capital and Calculus Capital show a steady increase in the number of advisers using in EIS schemes over the last three years.
katherine.denham@ft.com
