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EIS/VCT and Patient Capital reviews

EIS/VCT regime

The 2015 Finance Bill (as a condition for state-aid approval) contained a sunset clause that would restrict EIS/VCT tax relief to shares issued before 6 April 2025. The BVCA has asked in its 2021 Budget submission for HMT to renew this and state its position as soon as possible to avoid creating uncertainty in a sector that is vitally important to the UK SME and start-up sector.

The BVCA has also created an EIS/VCT Subcommittee (as part of the Venture Capital Committee – details here) to coordinate efforts in addressing this and look at further changes to the regimes. We are working with UKBAA, EISA, AIC and the VCTA on this area given the importance of angel, SEIS/EIS and VCT investment in the broader venture and growth capital funding ecosystem.

The BVCA had previously engaged on the updates to EIS/VCT reliefs as part of the Patient Capital Review.

Patient Capital Review

The BVCA engaged on the HM Treasury led Patient Capital Review to further strengthen the UK as a place where growing innovative firms can obtain the long-term “patient” finance that they need to scale up. This work took place over 2016-2018. The review found that the UK provided significant support to the start-up industry through initiatives such as EIS/VCTs but needed more scaleup capital. The published report can be found here.

A consultation,Financing Growth in Innovative Firms, was launched in August 2017 to explore ways to improve the flow of patient capital. Venture capital tax advantaged schemes such as Enterprise Investment Scheme (EIS), Seed Enterprise Investment Scheme (SEIS), and Venture Capital Trusts (VCTs), were considered as part of the review. The government responded to the consultation at Autumn Budget 2017, announcing an action plan to unlock £20 billion of investment over the next ten years. The government’s full response to the consultation can be found here.

  • Patient Capital Fund of Funds Programme – The BVCA and BBB hosted a joint roundtable in March 2018 with fund of fund managers to discuss the new private sector Fund of Funds for patient capital. Further details on the Managed Funds programme can be found here.
  • British Patient Capital – The BBB launched British Patient Capital in June 2018, a £2.5bn programme designed to enable long-term investment in high growth potential companies vie venture and growth equity funds. Further detail can be found here. The BBB also gave a presentation to BVCA members in July 2018 and their presentation is available here.
  • National Security Strategic Investment Fund (NSSIF) – The BBB has also encouraged BVCA members to consider applying to the NSSIF programme, which is an additional option for British Patient Capital and Enterprise Capital Fund managers wishing to tap into the intelligence community’s expertise when investing in dual use technologies that could contribute to the UK Government’s national security mission. In Budget 2020, the Government increased funding for the NSSIF programme from £85m to £135m and extended its approach so it can invest directly in advanced technology firms.
  • Pensions Task Force & DC pensions review – The BVCA was a member of a HMT taskforce looking at pensions investment and the Productive Finance Working Group looking at how to tackle barriers related to DC pension schemes investing in illiquid assets. Our work on this is ongoing and a summary of BVCA engagement is available here.
  • EIS knowledge intensive fund consultation – HMT published a consultation on the capital gap that knowledge-intensive companies face, which explores possible options for an EIS fund structure aimed specifically at investment in knowledge-intensive companies. The BVCA response can be found emhere and the new regime was announced in July 2019. The regime applied from March 2020 and HMRC guidelines for those applying for the EIS KI Fund can be found here.

Further information


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