The UK has seen investment habits changing over the past few years, and investing into SMEs has become a more attractive opportunity based on SEIS and various other tax incentives available from the government.
In terms of incentives we discuss SEIS in more detail below, but the original scheme for more mature businesses is EIS and then also Venture Capital Trusts (VCT) – tax effective vehicles for investing into unlisted Companies.
What’s changing? Although property prices have seen good growth over the past few years, some experts are predicting that this may flatten off in in the UK in 2022. Some think we’re in for a volatile year (who knows… we are just accountants). Also, as house prices are almost at record levels, it actually makes it harder for investors to get into the party.
In 2021 there were a record 319,000 new businesses registered in the UK. There have been some major shifts in the landscape as we’ve emerged from Covid-19, and a much higher proportion of the UK workforce have started their own Companies and are looking to work for themselves. (To hear about some of the most exciting ones, check out our new podcast on Spotify)
SME investment is now an exciting option for investors. The combination of the growth in the sector, and the tax incentives available suggest we’ll see investors attracted to SMEs throughout 2022.
Why now? In addition to this, SMEs around pre-Covid-19 have, on the whole, had a very difficult last couple of years. From 2020 onwards lots of start-ups put funding plans on the back burner due to uncertainty. Now as the dust settles, plans are starting to shore up and investment rounds are kicking off.
According to a survey of 2,000 SME owners – over half of UK SMEs are confident that demand and revenues will increase in next 6-12 months, and the figure rises when looking at the next 3 years.
The business environment has shifted, and SMEs are looking ahead with more confidence.