A BREWERY and pub group is the latest company to brace itself for possible changes to investment rules ahead of the Budget this month.
West Berkshire Brewery, which owns a pub in London and has recently acquired two more, has confirmed that it would close its latest Enterprise Investment Scheme (EIS) funding round on 17 November and a new share allotment will take place on 21 November, the day before the budget.
This comes following reports that the treasury is considering reforming EIS. The scheme gives individual investors tax relief, with the purpose of encouraging investment in small British companies.
Operators of asset-rich companies such as pub groups fear that the chancellor could clamp down on the use of EIS funds for buying assets such as property.
The treasury has reportedly been mulling a crack-down on the scheme to stop high earners abusing the tax relief. However last month a group of supporters for the scheme wrote an open letter in the Sunday Times warning that limiting EIS could prevent the UK from creating top startups.
“They don’t believe that they are risky enough,” Alex Davies, chief executive of EIS operator Wealth Club, told City A.M. “If it all goes wrong, you still have an asset at the end of the day.”
Davies added: “Whether it’s a pub, nursery, it’s a multiplier effect on the economy. You have to employ staff and tradesman, and often you invigorate run-down areas. To take it away would be ridiculous.”
In an interview with Wealth Club recorded last month, West Berkshire Brewery chair David Bruce said the threat of tighter regulation was “a very good reason now for filling your boots”.
“West Berkshire Brewery has got EIS clearance so we want to go out there. That’s why we’ve got two fabulous projects, £5m between the two of them, we can use EIS money for that. After November 22nd there’s a danger we can’t use EIS money for that
But the pub and drinks industry veteran also said that the brewery would borrow against its balance sheet in the event that it is prevented from buying new assets with EIS money.