It’s great that the government have chosen to encourage investment in high risk startup ventures, however I’m unsure of the extent to which the proposed changes to the EIS and VCT rules alone will help solve the current funding gap. These measures are a blessing for the creative and tech industries which have the hardest time accessing funding and alongside the plans to create ‘Digital Shoreditch’ means the future looks considerably brighter.

From the 6th of April 2011, a further 10% income tax break will be given to any individual investors in EIS companies as well as a doubling of the current £500k investment limit. All positive steps, although perhaps overshadowed by the significant 400% increase on the amount of money currently able to be invested in an EIS or VCT company from £2 million to £10 million. This will have a huge impact on many businesses and is available to those companies with up to 250 employees and up to £15 million in gross assets before investment. Unfortunately any investment in an EIS or VCT company will still require state aid approval which was the primary reason for the previously low levels; I guess we can’t win every battle but these are definitely positive steps.

The chancellor has effected a doubling of the ‘entrepreneurs relief’ scheme‘s lifetime limit to £10 million from the 6^th of April. The benefit of the ‘entrepreneur’s relief’ is a cap on CGT tax to 10% on the sale of business assets for small business owners, hopefully this measure should help encourage serial entrepreneurs to reinvest more gains and provide stimulus to the economy.

I welcome the changes to the R&D rules increasing the SME scheme rate of R&D relief to 200% from April 1st 2011 and an additional 25% from April 1st 2012, however a further simplification of the claims procedure and an extension of the definition of qualifying spend to apply to more games development expenditure would have been welcome. Onwards and upwards for startups!