EIS 2018 report (web)

Welcome to the fourth edition of the annual EIS Industry Report EIS has been a highly successful component of the UK venture capital (VC) landscape for an extended period, with the amount of funds raised and companies raising funds increasing year-on- year. But, this year has seen the press full of pessimism in the light of the Patient Capital Review and a drop in the fundraising total in the tax year following the rule changes introduced in 2015. The changing economic and political backdrop has highlighted the huge importance of SMEs to UK PLC, and supporting those with high growth potential has been prioritised by the government in the November 2017 budget. There is no doubt that some areas of the EIS market will be substantially reshaped as a result, and we seek to give advisers some insights into what that will mean to them and their clients. We still see plenty of optimism from advisers and providers about the growth opportunities that are now being propelled to the forefront of EIS and, in fact, a large portion of UK VC. It’s worth remembering that EIS has not been singled out as the naughty boy and punished with new regulations that increase its risk profile. It has, in reality, been identified as a crucial driver of SME prosperity, with the potential for investors to take advantage of explosive expansion, as well as the accompanying income tax, IHT, CGT and loss relief that EIS offers. Our aim is to ensure that advisers continue to have the tools and analysis they need to make their own informed decisions about EIS, taking into account its recent history, current guise and future outlook. I hope it fulfills those ambitions and proves to be a useful resource for you over the next twelve months. GUY TOLHURST Managing Director Intelligent Partnership Editorial John Schaffer Lisa Best Creative Mar Alvarez Estela Alcay Sub-editing John Schaffer Lisa Best Research John Schaffer Lisa Best Alan Sheehan Van Li Katie McCarthy Marketing Michelle Powell Jeremy Gordon Print Palina Limited Copyright © Intelligent Partnership 2018 DISCLAIMER This publication is not included in the CLA Licence so you must not copy any portion of it without the permission of the publisher. All rights reserved. No parts of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means including electronic, mechanical, photocopy, recording or otherwise, without written permission of the publisher. This publication contains general information only and the contributors are not, by means of this publication, rendering accounting, business, financial, investment, legal, tax or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional adviser. Neither the contributors, their firms, affiliates nor related entities shall be responsible for any loss sustained by any person who relies on this publication. The views and opinions expressed are solely those of the authors and need not reflect those of their employing institutions. Although every reasonable effort has been made to ensure the accuracy of this publication, the publisher accepts no responsibility for any errors or omissions within this publication or for any expense or other loss alleged to have arisen in any way in connection with a reader’s use of this publication. This publication is based on the authors’ understanding of the structure of the arrangements detailed, the current legislation and HM Revenue & Customs practice as at January 2018, which could change in the future. It is not an offer to sell, or a solicitation of an offer to buy, the instruments described in this document. 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. FOREWORD