The Association of Investment Companies (AIC) has welcomed the postponement by the Treasury of the introduction of new rules to limit the amount of money investors can pour in to Venture Capital Trusts (VCTs).
The rules would cap the amount that can be invested in VCTs – as well as other small business by schemes such as VCTs, enterprise investment schemes and seed enterprise investment schemes – at £2 million in any 12-month period.
While the limit was originally due to be introduced today (Friday 5 April), without any consultation period, the government agreed to delay enforcement until the summer following an emergency meeting between the AIC and the Treasury.
In a statement published today, the AIC said it had been concerned that the timing of the new provisions did not give the venture capital sector time to adapt its investment processes and plan for the change.
Ian Sayers (pictured), AIC director general said: ‘The Treasury has quickly recognised that introducing these rules at short notice would have created problems for VCTs seeking to invest in small businesses in the next few months.’
‘It agreed that this would be unhelpful at a time when UK SMEs are struggling to find reliable sources of funds.’
He added that the government’s response to industry concerns shows its commitment to supporting the venture capital sector, and would provide more time for small businesses and investors to plan how they will deal with the limit.
Sayers pointed out that the cap itself was also currently under review, and the government was pushing for it be raised to £5 million. Such an increase is dependent on the approval of the European Commission, he said.