HMRC - Delivering a cap on income tax relief: a technical consultation

As mentioned above, one of the key roles that the UK Business Angels Association is to act as the voice of the investment community in relation to policy developments that affect the growth of angel investing. One of these key issues that has arisen as a result of the Government’s announcements at the last Budget is concerning the issue of the Cap on Loss relief of £50,000 on investment in EIS businesses. Whilst  we all appreciate the Government’s concern to avoid abuse of the important tax regime supporting investors, it is clear that there are major negative consequences from this new proposed ruling which is likely to deter many active angel investors from taking risks through their investments in small businesses. We are also aware that many Angel investors make repeated investments into the same company and therefore over 3 -5 years an Angel can easily invest around 250k or more in individual EIS companies. As our research has shown, at least 50% of companies in which Angels risk their investments fail and it is vital to off set that loss against income tax. A cap of £50k will deter these repeated EIS investments which are essential to the survival of the companies. We have already received a number of comments from active angel investors in the community and have made approach to Lord Young, the Prime Minister’s policy team and to HMRC and Treasury. This has resulted in a new consultation having been launched by HMRC CLICK HERE for more information.

The consultation has a closing date of 15^th October, but we would like as many investors and those working with the investment community to put forward their responses, ideally copied into me (jenny.tooth@ukbusnessangelsassociaiton.org.uk)  to enable us to mobilise as many responses as possible and ensure  that the collective lobby of the angel investment marketplace can be made to Government with a view to achieving change in this proposed ruling to ensure that this relief is retained as a key support for those actively concerned with investing in early stage EIS qualifying businesses. I look forward to hearing from you all in the weeks ahead and if possible do copy your responses to us asap and, ideally by 14th September to maximise the opportunity to pull these all together.