Sacha Bright, CEO of www.businessagent.com on the impact that today’s budget news will have on VCT & EIS investors and the alternative investment space…
Hammond’s budget today will be welcomed by the alternative investment community. More money to the British Business Bank is likely to feed through to the peer-to-peer (P2P) community and changes to EIS and VCT investments are about trying to encourage more direct investing in genuinely entrepreneurial companies which is what crowdfunding is all about.
It seems clear that the Government is targeting large sums of money invested in tax-vehicles, rather than growth company investment vehicles, with the EIS and VCT changes. This makes it awkward for some investment managers for whom tax efficient investment in so called ‘safe investments’, where the risk to your capital investment is minimised as much as possible, has been highly profitable. In effect HMRC policing of the types of companies that are eligible for EIS and VCT funds will be stricter and this may put off many current investors who prefer some degree of reassurance from their high risk growth company investment.
But for those investors looking for long term growth in young, entrepreneurial companies the changes should be welcomed. Increased limits could make a big difference and whilst the tap of money from fund managers may temporarily reduce in flow, there appears to be an awareness and support of the role that crowdfunding has to play in funding these companies. All in all we think the news today has been positive for young, growing companies, particularly those in the digital space; direct investment is being encouraged and Government funds are being deployed.