Chancellor Jeremy Hunt confirmed that the Venture Capital Trusts and Enterprise Investment Scheme sunset clauses would be extended to 2035 as part of today’s Autumn Statement.
Tom Wilde, head of tax at law firm Shoosmiths, said the whole start-up and scale-up industry is now breathing a collective sigh of relief.
“This extremely welcome certainty allows businesses and investors to plan their future fundraising and investing strategies in an orderly fashion and, combined with the announced cuts in national insurance, gives the whole venture capital market a very welcome shot in the arm,” he said.
The VCT and EIS were launched in the 1990s to encourage investment in smaller companies. They offer tax reliefs to compensate investors for the greater risk they are taking for investing in early-stage companies.
Prior to today, the sunset clause on the VCT and EIS had meant the tax relief was only available to subscribers for shares issued before April 6, 2025.
Nicholas Hyett, investment manager at Wealth Club, said today’s extension removed the uncertainty that has been lingering over the sector for some time and secured a “crucial” source of funding for the UK’s “blossoming” start-up scene.
“It is a shame that the sunset clause hasn’t been abolished together – which would have avoided a repeat of the current uncertainty in a decade’s time,” Hyett added.
Annabel Brodie-Smith, communications director at the Association of Investment Companies, shared Hyett’s frustrations.
“Of course, the abolition of the sunset clause altogether would be desirable but the extension to 2035 brings much-needed stability and reassurance to smaller companies and the industry,” she said.