Mark Payton was recently interviewed by Alec Macfarlane of AltAssets. Here is an excerpt from the article below. To read the full article here. http://www.altassets.net/private-equity-news/by-pe-sector/venturegrowth/smaller-investors-british-smes-set-to-capitalise-on-eis-provisions.html
Smaller investors, British SMEs set to capitalise on EIS provisions
The UK’s new Finance Bill has divided the UK private equity space, and is expected to put an end to management buy-outs through venture capital trusts in the future. However, smaller investors and British SMEs stand to benefit greatly from the new provisions surrounding EIS schemes, according to Mark Payton, a managing director at UK venture capital fund manager Mercia.
The draft bill currently making its way through parliament proposes to ease the rules on how much money individual investors can invest in – and how much firms can invest through – EIS schemes and VCTs, which were introduced by the UK government in 1995 as tax incentives to encourage people to invest in venture capital.
The aim of the bill is to focus the EIS and VCT schemes better on higher risk activities, helping smaller, higher-risk companies to secure growth capital. Advantages for investors include 30 per cent income tax relief, capital gains tax deferral, tax free capital gain, 100 per cent exempt from inheritance tax after two years and loss relief.
In addition, the investment ceiling for individual investors will increase from £500,000 to £1m, and the £1m maximum that firms can invest in a single company will also be lifted. The scheme will also lift the limit for the number of staff that an EIS-backed business is permitted to employ, a move that has been widely welcomed by the venture capital industry.
“If you think about where we were 12 months ago, the moment a business grew to over 50 employees you lost your EIS benefits, so we would have boardroom discussions about not growing a business because individuals would be losing their EIS, which is mad. Now it’s up to 250 employees, so you don’t have that problem anymore,” Payton told AltAssets.