The government has been urged to revisit the Enterprise Investment Scheme (EIS) in the upcoming Budget.
Louis Schwartz, chief executive of peer-to-peer lending platform Loanpad, said that he wants the government to boost the scope and benefit of EIS and Seed Enterprise Investment Scheme (SEIS) in order to encourage new lending.
“For example, increasing EIS allowance to 50 per cent which I think would give a considerable boost to promising start-ups by encouraging more people to back them,” he said in a blog on Loanpad’s website.
Gary Robins, head of business development at private equity investment firm Growthdeck, said the government should open up EIS to green infrastructure projects, such as funding the production of more electric car charging ports, after banning these investments through the scheme in 2015.
He said that this would help towards meeting the UK’s goal of bringing greenhouse gas emissions to net zero by 2050 while providing capital and creating jobs for small- and medium-sized enterprises, benefitting the overall economy.
Robins said there is scope for EIS to be extended to support other sectors currently excluded, such as the struggling hotel industry.
The Chancellor should revisit shelved plans to increase the income tax relief on EIS investments from the current 30 per cent to 50 per cent, he added.
“In order to meet the government’s net zero goal, a flow of capital into the UK’s green infrastructure will be key,” Robins said.
“Broadening the vital EIS funding pipeline to these projects must be part of this. EIS investments have been vital in encouraging growth of early-stage tech businesses in the UK and would also stimulate the expansion of green energy projects.
“Increasing the number of electric car charging points in the UK is crucial but growth is still too slow. If EIS funding were channelled into that area, it could make a significant difference.
“It is also worth considering opening EIS to include sectors which have been hard hit by the current pandemic. Sectors like hotels would benefit from much more investment.”