New tax relief rules introduced in this year’s Finance Bill could jeopardise growth plans for Scotland’s tech businesses, according to a leading accountancy firm.
Stricter guidelines introduced in the Summer Budget and Finance Bill which affect the Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCT) could harm some firms’ growth plans, says Edinburgh-based Baker Tilly.
According to Baker Tilly, both the EIS and VCT schemes have, until now, raised billions of pounds in funding for small businesses – particularly in the technology sector.
But the new rules will mean the following:
A reduced age limit on companies eligible to apply for EIS or VCT finance. The age limit has been reduced from the proposed 12 to seven, with a few exceptions.
A cap on the total risk finance funds raised by a knowledge-intensive companies of £12- £20 million.
No EIS or VCT funding can be used for the acquisition of other companies or trades.