The European Commission has approved, under EC Treaty State Aid rules, three UK fiscal venture capital schemes. All the requirements of the Community risk capital Guidelines have been met, after the UK modified the schemes.
According to the Commission press release, the objective of the UK's venture capital schemes is to encourage private risk capital investment in unquoted small and medium-size enterprises (SMEs) in the UK by providing a range of tax relief to individual and corporate investors who invest minority stakes in qualifying SMEs. The expected annual amount of tax relief across the schemes is approximately GBP 250 million.
The press release goes on to contrast the Venture Capital Scheme with the Enterprise Investment Scheme - under the Enterprise Investment Scheme (EIS), private individuals receive tax incentives for making direct investments in qualifying SMEs. The Venture Capital Trust (VCT) scheme offers tax incentives to private individuals for collective investments through VCTs, managed by professional fund management companies. The Corporate Venturing Scheme (CVS) provides tax relief to companies making direct investments in qualifying SMEs. The maximum annual investment limit per qualifying company raising money under the three schemes is GBP 2 million.
The Commission press release is available here