In a recent article by Growth Business Timothy Adler discusses the fall in funds raised through the EIS scheme during 2018.
The article follows the ‘Tax Efficient Review’ in which the HMRC estimates EIS funds decreased from £1.8bn to £1.4bn. The decline can largely be linked to the ‘risk-to-capital’ legislation; “Mark Brownridge, director general of EISA, said: ‘They want every pound to be at risk … you can’t have a low-risk EIS.’”. Dr. Brian Moretta, comments “Both of those figures agree with my sense of where the market is at. Clearly, there has been a big change in the EIS market. Some advisers were lost in that change. The biggest products two years ago aren’t there now, and there’s no equivalent out there.”
Whilst the figures show a decline in funds Moretta expects that the interest in investment start-up companies will in fact increase as the market appetite for risk changes. Adler states ‘Moretta is upbeat that IFAs will eventually come around, with advisers becoming more comfortable with increased risk. The way that the Venture Capital Trust market has grown with private investors gives him encouragement.’
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