Income Tax Act 2007 section 173A

The maximum amount raised annually through risk finance investments requirement

Section 173A sets an annual cap on the total amount of risk finance investment that a company (and its group) can receive in the year ending with the date the relevant shares are issued, with a higher limit for knowledge-intensive companies.

• The annual risk finance investment cap is £10 million for knowledge-intensive companies and £5 million for all other companies, measured over the year ending on the date the relevant shares are issued.
• Relevant investments include not only investments made directly in the issuing company but also those made in its 51% subsidiaries and those used to fund trades that are subsequently transferred into the group during that year.
• A "relevant investment" covers investments made by a VCT, share issues supported by EIS, SEIS or social investment tax relief compliance statements, and certain other investments that received EU State aid approval before IP completion day.
• Where a company has been trading for less than three years, a modified forward-looking test based on the three years following the share issue date is used to determine whether it qualifies as a knowledge-intensive company for the purpose of the higher £10 million limit.