EIS Industry Report 2019/20

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Intelligent Partnership is not authorised and regulated by the Financial Conduct Authority and does not give advice, information or promote itself to individual retail investors. It is the responsibility of readers to satisfy themselves as to whether any arrangement contemplated is suitable for recommendation to their clients. Tax treatment depends on an investor’s individual circumstances and may be subject to change. Certain investments carry a higher degree of risk than others and are, therefore, unsuitable for some investors. Welcome to the sixth edition of the annual EIS Industry Report The Enterprise Investment Scheme continues to be a vital contributor to the UK small business investment space, with recent changes to the risk to capital condition seemingly helping to invigorate this market. Appetite from advisers has remained strong, as managers, investors and investee companies have adjusted to the rule changes brought in through the 2017 Budget. The investment case for EIS remains key and investment managers are continuing to look for innovative and exciting high growth opportunities that will fit with the demands of a higher risk to capital requirement. At a time when there are various different routes for companies to find and raise investment, EIS has shown itself to be among the most successful, having helped over 29,770 companies start and grow their business and provided over £20 billion of equity funding over the past 25 years. Perhaps one of the most intriguing aspects of the scheme over the past year, however, has been the somewhat unexpected return of film and media to the EIS fold. In our last report, we reported that companies working in film and media were struggling to fit within the risk to capital requirements needed for EIS investments, and predicted this once powerhouse of the market would see a significant reduction in activity. While to a certain extent this has been the case, it is notable that as 2019 has progressed, there have been more managers willing to venture back into this area. EIS and Venture Capital Trust (VCT) investments have become a huge part of the UK film and media success story over recent years and that now looks likely to continue as managers, investors and investee companies - not to mention HMRC - get their heads around the rules and develop new approaches to investing. The importance of EIS in this context was underlined by the BFI’s fund, launched in May 2019. Meanwhile, we still await further details on the government’s planned knowledge-intensive companies (KICs) fund, which is likely to serve as a further reminder of the continued importance of this sector to the EIS market. I hope you find this market update a useful snapshot of the EIS landscape. We also produce an Adviser’s Guide to EIS, which offers an everyday reference to the practicalities involved in harnessing this tax efficient scheme. GUY TOLHURST Managing Director Intelligent Partnership Editorial Paul Jarvis Creative Mar Alvarez Estela Alcay Sub-editing Lisa Best Research Paul Jarvis Lisa Best Van Li Marketing Carlo Nassetti Print Palina Limited Copyright © Intelligent Partnership 2019 ISBN: 978-1-913273-02-6