The Government announced increases in the amounts for which an EIS investor may claim income tax relief in any one year from £400,000 to £500,000. Although this change can only be effective once the European Commission has given State Aid approval, assuming it becomes effective it will be backdated to apply to EIS shares issued on or after 6 April 2008.
For EIS, CVS and VCT, the categories of activities qualifying for relief are to be narrowed with effect from 6 April 2008 for shares issued under EIS or CVS and from money raised on or after 6 April 2008 for VCTs. Shipbuilding and coal and steel production will no longer qualify for relief under any of the three schemes. These changes reflect European Commission State Aid requirements.
At the same time, the Government has launched a consultation process into the EIS regime. The consultation will seek to identify whether the EIS regime could be simplified to encourage greater investment, how greater awareness of the EIS regime might be achieved and whether advanced assurances of EIS status (currently not available) might make a difference, as well as whether the rules regarding qualifying activities or use of funds raised could be improved. The consultation period ends in June 2008.