Government must back investment in deprived areas, say business angels

BUSINESS angels network Envestors NW has called on George Osborne to offer entrepreneurs a tax incentive to put their money into the region’s deprived areas when he announces the Budget.
 
Mr Osborne wants SMEs to help create the jobs that will kick-start Britain’s economy. However, Envestors NW said the Chancellor could extend the Enterprise Investment Scheme (EIS) to incentivise investors.
 
Tom Wilkins, managing director of Envestors NW, said an 80% income tax credit on the amount invested into a business in a deprived area would offer a compelling reason for entrepreneurs to invest in poorer areas.
 
Currently, EIS offers 30% income tax relief on investments in private SMEs, as well as a reduction in risk for those putting the cash in.
 
Mr Wilkins said: “We know very well that the North West is a large and diverse region, and some areas have been left behind in recent decades.
 
“Governments are always at pains to point out that they are pro-active in supporting investment in deprived towns and cities, but at present there is very little to persuade business angels to put their money in.
 
“Extending EIS to 80% income tax relief when entrepreneurs invest in a more deprived area would be a genuine statement of intent by the chancellor that he is serious about encouraging enterprise in all parts of the UK, not just the affluent areas.
 
“We deal with dozens of people every week who are looking to invest in exciting businesses. However, these investors need the right support to create the wealth Britain needs.”
 
EIS was first introduced in the UK in 1994 to encourage investment in private companies. Last year, the government announced plans for Seed EIS, which comes into effect in April and offers a 50% income tax relief for those investing in start-ups.