§ In my view, there remains, too, a strong case for encouraging equity investment in unquoted trading companies.
§ I propose to introduce a new scheme, the enterprise investment scheme, to do just that. The enterprise investment scheme will differ from the old business expansion scheme in several important respects. To target the money where we want it to go, property-related investments will be excluded. Up-front tax relief will be limited to 20 per cent., but any losses on investments will qualify for income tax and capital gains tax relief; and all capital gains within the scheme will be entirely free of capital gains tax. The limit for investors will be £100,000 a year.
938§ Most important of all, to help those who are looking to invest their expertise as well as their money, people previously unconnected with the companies they invest in will be able to take up paid directorships. The cost of the new scheme could eventually rise to some £50 million a year. Taken together with my proposals on capital gains tax and the new venture capital trust, I believe that it could generate substantial new investment in the unquoted company sector.