MPs call for Treasury to set out clear plans on EIS and VCT extension

investmentweek.co.uk:

Conservative MP Harriett Baldwin (pictured) is the chair of the Treasury Committee.

In a report published today (24 July), MPs called for urgent action on the sunset clause affecting EIS and VCTs, which will cause their tax reliefs to expire in April 2025, unless amended.

The committee is urging the Treasury to «detail and implement an extension urgently» as uncertainty over when the extension will take place and for how long poses «a risk to investment».

«Despite previous calls from the committee, the Treasury has not provided clarity on when venture capital tax reliefs with expiry dates will be extended,» it said.

«The government should extend the schemes at the earliest opportunity to provide more certainty to founders and investors.»

VCT investment increases 68% to £1.1bn

According to the committee, the renewal of the EIS and VCT schemes is an opportunity to improve them to address current shortcomings, including diversity, regional inequality and scale-up capital.

«Diversity in the sector is extremely poor, both in terms of the characteristics of business founders that receive venture capital funding and the people who make venture capital funding decisions,» it said. 

The cross-party report found that businesses with all-female founders received just 2% of all venture capital funding in 2021, while less than 2% went to black and ethnic minority-led businesses.

«Statistics which show just two pence in every pound of investment goes to all-women led businesses demonstrate a shocking dereliction of duty given the level of government support for the industry through tax reliefs,» said Harriett Baldwin, chair of the Treasury Committee. 

Moreover, the report highlighted that venture capital investment is