Investment planning; EIS subscriptions rose in 2019/20 and more

Contents:

Temporary Registration Regime extended for cryptoasset businesses
EIS subscriptions rose in 2019/20

Temporary Registration Regime extended for cryptoasset businesses

(AF4, FA7, LP2, RO2)
The Financial Conduct Authority recently issued a press release which states that the end date of the Temporary Registrations Regime (TRR) for existing cryptoasset businesses will be extended from 9 July 2021 to 31 March 2022.

The TRR was established last year to allow existing cryptoasset firms that applied for registration before 16 December 2020, and whose applications are still being assessed, to continue trading pending the FCA’s determination of their application.

The FCA was not able to assess and register all firms that have applied for registration, due to the complexity and standard of the applications received, and the pandemic restricting the FCA’s ability to visit firms as planned.

Numerous businesses are not meeting the required standards under the Money Laundering Regulations which has resulted in an extraordinary number of businesses withdrawing their applications.

The extended date allows cryptoasset firms to continue to carry on business while the FCA continues with its robust assessment.

EIS subscriptions rose in 2019/20

(AF4, FA7, LP2, RO2)
HMRC has recently released its latest statistics for Enterprise Investment Schemes (EIS) and Seed Enterprise Investment Schemes (SEIS). These take us up to 2019/20 and also update earlier data. For example, the amount raised under EIS in 2018/19 was originally put at £1,824 million by 3,905 companies, but has now been revised to £1,867 million and 4,060 companies. The upward adjustment means that comparing 2019/20 provisional data with the revised 2018/19 may give a slightly distorted picture. With that caveat in mind, the main points to note are:

EIS:

• Since the EIS was launched in 1994, 32,965 companies have received investment and around £24 billion of funds have been raised.
• The provisional total amount of EIS funds raised in 2019/20 was £1,905 million, an increase of 2% on the revised amount for the previous year. The number of companies raising EIS monies also rose by nearly 4%, to 4,215.
• In 2019/20, a total of £466 million of investment was raised by the 1,500 companies raising funds under the EIS scheme for the first time.
• Companies recorded as from the Information and Communication sector accounted for £630 million of investment (33% of all EIS investment) in 2019/20.
• The number of investors claiming income tax relief on self-assessment forms under the EIS has decreased, from 37,955 in 2018/19 to 36,950 in 2019/20. However, these figures are provisional and likely to be revised as more returns are received by HMRC.
• The majority of investors claiming income tax relief tend to invest smaller amounts of money into companies qualifying for EIS. In 2019/20, 83% of EIS investors made a claim for tax relief in respect of an investment of £50,000 or less. This is similar to the levels seen in 2018/19.
• In 2018/19, new limits were introduced for investments in KICs. These allow individuals to invest up to £2 million in a year if they are investing in a KIC. There were 65 investments of between £1 million and £2 million in 2019/20, contributing £100 million of investment. With the higher limit available, investments of over £500,000 comprised 18% of the total amount of EIS investment raised on which claims were made in 2019/20.

SEIS:

• Since the SEIS was launched in 2012/13, 13,800 companies have received investment and around £1.4 billion of funds have been raised.
• The provisional total amount of SEIS funds raised in 2019/20 was £170 million, down very slightly on the upwardly revised figure for the previous year of £171 million. The number of companies raising SEIS monies also fell, to 2,090 from an upwardly revised 2,125 for 2018/19.
• 1,620 of the companies were raising funds under the SEIS scheme for the first time in 2019/20, representing £145 million of investment.
• Companies recorded as from the Information and Communication sector accounted for £62 million (37% of all SEIS investment) in 2019/20.

The statistics also cover Social Investment Tax Relief (SITR):

• Since SITR was launched in 2014/15, social enterprises have raised funds of £15.8 million through the scheme.
• In 2019/20, 30 social enterprises received investment through the Social Investment Tax Relief (SITR) scheme, and £3.3 million of funds were raised. This is a decrease from 2018/19, when 45 enterprises raised £4.7 million.

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