This article was written shortly before the Summer Budget of 2015. Since then, some of the measures have been modified and are now enacted in F(No 2)A 2015, together with the introduction of a new blanket prohibition on using the funds raised to acquire shares in another company. For VCTs this puts a damper on the practice of raising money to finance management buy-outs.
One of the announcements made during Budget 2015 was a series of measures aimed at tweaking the Venture Capital Schemes so that they are in line with EU State Aid rules.
There are four Venture Capital Schemes, though the rule changes affect just two of them, the Enterprise Investment Scheme (“EIS”), and the Venture Capital Trust Scheme (“VCT”). The other two schemes are the Seed Enterprise Investment Scheme (“SEIS”) and the Social investment Tax Relief Scheme (“SITR”) introduced last year.