Data released by HM Revenue & Customs showed a significant increase in the number of individuals making investments under the enterprise investment scheme (EIS) in 2016.
The Enterprise Investment Scheme (EIS) allows individuals to invest up to £1m into early stage companies, and receive significant tax reliefs.
More than 10,000 investors deployed capital into EIS mandates in the year to April 2016, an 18 per cent increase on the previous year.
HMRC stated “increasing use of crowdfunding platforms” is behind the increased interest in EIS investments.
The data shows more than £16bn has been invested under the EIS scheme since it launched in 1994.
As FTAdviser has previously reported, HM Treasury is examining whether the EIS tax breaks are fulfilling their function.
HM Treasury issued a paper in August, called “Financing Growth in Innovative Firms”.
The paper stated “the majority” of EIS funds invest with the aim of capital preservation, which runs contrary to the aims of the tax breaks.
That has prompted fears the rules on the sort of companies that qualify for EIS funding could be tightened.
david.thorpe@ft.com
