Tax breaks for SME investors

Part of the governments plan to stimulate growth the help move the country out of recession is to offer tax breaks to those people who are investing in small and medium sized enterprises. The breaks which have recently been approved by the EC are worth up to £100 million.

The changes are part of the Enterprise Investment Scheme which the chancellor has recently announced changes to. The improvements on the EIS include raising the relief on tax for SME investors from 20% to 30% – these measures will be coming into effect next April.

George Osbourne has also said that the amount of businesses that the EIS covers will also be being increased and the amount that people can invest in businesses through it will also be expanded. Osbourne was waiting for the EC to approve the changes that he put forward and now that they have done that he can continue the implementation.

The EIS was initially started as a way to help smaller businesses who were regarded as higher risk to get the investment that they needed. This was done by incentivising investors by offering them tax breaks when they bought shares in the companies. The government has estimated that the scheme benefited nearly 2,000 businesses in the 2008/09 financial year. The changes are expected to increase the number of investors and help small businesses to expand