Changes in the Finance Bill are designed to help small business. John Heffernan (Sunday Business Post) wrote the following article

The existing Business Expansion Scheme (BES) is being reformed and renamed the Employment *Investment Incentive (EII).

The new incentive is planned to replace the BES scheme and the Seed Capital Scheme. It is subject to European Commission approval and a commencement order from the minister for finance.

The current BES scheme and Seed Capital Scheme will remain in place until a commencement order gives effect to the new incentive.

The EII could be considered as significantly more attractive than the BES scheme that it is replacing. Some of the key features of the new scheme are as follows:

*The scheme is available to the majority of small and medium sized trading companies and is not limited to the type of qualifying trades that applied under the BES.

*The certification requirements have been simplified.

*It would be easier for companies carrying on green energy activities to qualify.

*The lifetime company investment limit has been increased from €2 million to €10 million.

* The annual amount that can be raised by companies has been increased from €1.5 million to €2.5 million.

* The period for which shares need to be held has been reduced from five years to three years.

These changes will make the new incentive more attractive as it will apply to a wider range of companies, it will allow companies raise a larger amount of funds and it will encourage individuals to invest more money in these companies.

However, there is a downside. The maximum rate of tax relief for subscriptions for eligible shares has been reduced from41 per cent to 30pe r cent, in recognition of the reduced holding period.

However, a further 11 per cent of tax relief may be available at the end of the holding period, provided the company concerned has increased its number of employees since the investment was made, or the company has increased its expenditure on research and development.

The only significant change to the Seed Capital Scheme is that it too will been simplified by removing the limitation on qualifying trades.