Great news for investors and startups in the UK: The European Commission has given the thumbs-up to the UK government’s plan to extend the Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCTs) for another 10 years. This extension will push the sunset clause for these schemes to April 2035. The European Commission's approval came in a letter dated 22nd July 2024, marking a big step forward in securing this extension.

How We Got Here

The journey to this point started in April 2023 when the UK government began talks with the European Commission. The goal was to make sure the proposed extension wouldn’t run into any regulatory issues with the EU. The first signs of this extension appeared back in November 2023, when the government announced plans to extend the EIS and VCTs to 2035. This plan became law in February 2024, through the Finance Act.

However, there was a catch: the Act included a clause saying:

"This section comes into force on such day as the Treasury may by regulations appoint.”

In simple terms, this meant that the extension wouldn’t actually happen until the Treasury gave the final go-ahead. This delay was mainly because the Treasury was still in talks with the European Commission to make sure everything was above board.

Recent Updates

Just last month, the Treasury announced that they were in the ‘advanced stage’ of finalising this process. Now, with the European Commission officially saying they have no objections, it’s a very positive sign that the extension is on track.

What This Means for Investors

The EIS and VCTs are crucial for supporting early-stage companies in the UK. They offer tax incentives to investors willing to take risks on young businesses, helping to fuel innovation and growth. Extending these schemes to 2035 would provide long-term certainty for investors and startups alike, ensuring continued investment in the UK’s entrepreneurial ecosystem.

Looking Ahead

The European Commission’s approval is a major step forward, and it looks like the Treasury might soon confirm the extension. If all goes well, this extension will keep the EIS and VCTs in place for another decade, providing a big boost to investors and startups across the UK.

For now, we’re keeping our fingers crossed and waiting for the final word from the Treasury. But with this latest development, things are looking very promising.