News & Analysis

NEWS & ANALYSIS

Budget Update - 22nd April 2009

The word 'enterprise' was sadly lacking from the Chancellor's Budget statement today and the much hoped for increase in income tax relief turned out to be a red herring, damaging the funding prospects of countless businesses.

Labour announced only the following changes to the Enterprise Investment Scheme:

- HMRC have relaxed the time limits on the time a company has to employ its EIS funds from 80% in one year deployed to 100% deployed in two years

- HMRC have removed the link to other shares of the same class issued at the same time as qualifying shares

- HMRC have extended the period for carry back reliefand allow the full qualifying amount subscribed for to be carried back

- HMRC have corrected an anomaly regarding the capital gains position for investors in the event of a share for share exchange

In all, this is a very surprising set of reforms just at a time when a significant targeted incentive via the EIS could have stimulated private investment into the hugely cash-starved smaller company market.

We had hoped for an increase in income tax relief to the tune of 40% or even 50%

We were disappointed.