Tax breaks for investors in small leisure companies are to be extended after the European Commission (EC) approved the income tax relief on Enterprise Investment Schemes (EIS).
The EC has also approved the doubling of the annual investor limits to £1m the Treasury has confirmed.
In the Budget in March, Chancellor George Osborne said that he would increase the rate of income tax relief available under the EIS from 20% to 30%.
The increase in tax relief is backdated and comes into effect from April 2011, while new investor limits will apply from April 2012.
According to the Treasury, EIS, which is aimed at fast-growing businesses and the business angels who invest in them, supported over 1,800 businesses, raising £500m in investment in 2008/2009.
Established in the 1990s, the schemes have been a popular use of supporting, high-risk, start up companies, especially in the pub sector, with the likes of British Country Inns, Foundation Inns and Heartstone Inns all taking advantage of the initiative.
Mark Sheehan, managing director of Coffer Corporate Leisure, said: “The confirmation of the increase in EIS relief will help to attract investors in small businesses. With bank debt all but gone for many, raising cash by selling equity is the answer and this tax relief will help.”
