23 November 17

Budget Statement 2017: Encouraging Investment in Growth Businesses

1. Changes to VCT/EIS/SEIS rules

As widely anticipated the budget included a number of announcements of changes to the rules governing Venture Capital Trusts, the Enterprise Investment Scheme and the Seed Enterprise Investment Scheme.

The changes are principally focussed on ensuring that future funding is directed towards investments with the potential for growth, and as such do not materially affect existing investments.


As part of the Government’s move to encourage investment for growth, new investments made through EIS, SEIS and by VCTs must satisfy a “risk-to-capital” principles-based test, which will be based on an assessment that the investee company plans to grow and develop and that investors have a significant risk of capital loss. We welcome this principles-based approach, which we believe will be more effective in focussing funding to growth investment than expanding the list of excluded activities

Existing EIS investments and fully invested VCTs will not be affected.

For more information see our Budget Summary Document.

VCT only

There have been several changes to the detailed rules governing VCTs, which can be found in our Budget Summary Document. 

From next year VCTs will have to invest 30% of funds raised within one to two years and from 2019 the qualifying investment test will increase from 70% to 80%. Currently, the test is for 70% to be invested after two to three years. Furthermore, certain more favorable conditions applying to “old money” will be removed, and there are changes to the type of loans that VCTs can make to their investee companies.

These changes do not affect existing investments made by our VCTs or the VCTs’ investment strategies.

2. No Changes to BR or ISA rules 

There are no changes to Business Relief or to ISAs. The ISA limit remains at £20,000.  In its response to the Patient Capital Review the Government states that it supports BR for family businesses and in growth markets and will keep it under review.