Tax-based VCTs win state aid approval

The UK's three tax-based venture capital schemes (VCTs) have received formal state aid approval from the European Commission.

As a result, the Government will be allowed to provide certainty to the venture capital industry, investors and small companies over the future of the Enterprise Investment Scheme (EIS), Venture Capital Trusts (VCTs) and the Corporate Venturing Scheme (CVS), said the Treasury.
 
The department added that the schemes remain a vital component of the Government's strategy to support investment. They have so far facilitated around £10 billion of investment into more than 15,000 companies.
 
The schemes were notified to the EC as state aids in 2007. The Government is legally obliged to demonstrate that the rules governing them comply with the appropriate guidelines and treaties.

A final set of four changes is required to secure approval. Of these, the most significant is a relaxation of the rules relating to the location of small companies' qualifying activity.

This will allow companies to receive investment under the schemes while enjoying greater opportunities to expand internationally.

Legislation implementing the changes will be introduced in Finance Bill 2010, to provide time for consultation with industry over the detail.

The Treasury believes that the changes will increase use of the EIS, VCT and the CVS, providing greater investment finance to small companies seeking to grow.
 
Exchequer secretary Angela Eagle remarked: ‘This is excellent news for the venture capital industry, particularly at this challenging time. State aid approval of the three venture capital schemes allows the Government to provide certainty over the future of the schemes.’
 

Issue: 4204 / Categories: News , Investments