The chancellor, George Osborne, has unveiled new plans to increase tax relief as part of the expansion of the Enterprise Investment Scheme. Permission has been given by the European commission under State Aid regulation, with the law due to be changed in the near future, according to sources from the Treasury. Tax breaks of more than £100 million are to be announced, encouraging entrepreneurs to invest in the UK’s small businesses.

The Enterprise Investment Scheme will be maximised, with tax relief on EIS investments being raised to 30 percent, from the previous 20 percent. This relief will also be backdated to April 2011, so relief can be claimed from that date. Limits on investments will be increased to £1 million, double the previous figure. The raised investment limit will come into force April 2012.

The chancellor said:

“We want to make the UK the best place to start, finance and grow a business. These changes will give a bigger tax break to those who take risks for growth and jobs in Britain by investing in the small companies that have the potential to be fast growing.”

The government wants to help businesses with the potential to grow quickly, to stimulate economic growth and reduce the current levels of unemployment. Only six percent of businesses in the UK which employ ten people or more, demonstrate high growth. However, during the last three years, the same companies have created more than half of all jobs in the businesses that have ten or more employees.

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Gary Fields

Content Writer working alongside our expert accountants to bring you the latest Tax and Accounting news.

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