In 1897, the great American novelist Samuel Clemens, (better known as Mark Twain) visited London as part of a round-the-world speaking tour. Whilst there, a rumour began to circulate that Twain had become gravely ill, followed by a rumour that he had died. One leading American newspaper, so the story goes, actually printed his obituary and, when Twain was told of this, he quipped: ‘The reports of my death are greatly exaggerated.’

As a manager of Venture Capital Trusts (VCTs) and an Enterprise Investment Scheme services (EIS) which have raised c.£300 million over the last 14 years, I feel some empathy with Mark Twain. Throughout the second half of 2017, rumours abounded sounding the death-knell for VCTs and EIS.

Many worried that, following the government’s so-called Patient Capital Review, the Chancellor’s November Budget would emasculate these schemes by reducing their attractive tax reliefs and/or paring-back the universe of companies that qualify for their investment.

In fact, the changes that were announced in the Budget and which are now coming into force are largely positive and should be welcomed by investors, managers and entrepreneurs alike.

The tax reliefs were actually enhanced rather than reduced. Investors in VCTs and EIS continue to receive a 30% up-front tax break, tax-free capital gains and, (in the case of VCTs) tax-free dividends. An individual can now claim up to £660,000 of up-front income tax relief per annum by investing up to £2 million into EIS qualifying companies, (so long as £1 million is invested in ‘Knowledge Intensive Companies’) and investing £200,000 in a VCT. And VCT managers have now been given double the time to reinvest or distribute the proceeds of an exit.

Many good, solid businesses rightly qualify for investment through these schemes because they are unable to access capital from traditional sources. The introduction of the principles-based ‘risk to capital’ condition, rather than fixating on the specific trade, sector or asset base of a company, will ensure that the right businesses continue to be able to access funds from VCTs and EIS.

It is good to see that VCTs and EIS remain a viable and valuable source of funding for smaller and growth companies, whilst continuing to retain their attraction for investors. The government has obviously had to balance competing priorities, but there is no doubt that the value of these schemes to businesses and investors has been recognised and reaffirmed.

The feared destruction of VCTs and EIS has not happened. Or, as Mark Twain wrote, ‘I’ve had a lot of worries in my life, most of which never happened.’ We look forward to being able to back more UK businesses and deliver high-quality risk-adjusted returns for our investors in the years to come.

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