The 1983 Finance Act enacted what became the BES

The record

The UK's Finance Act 1983 received royal assent on 13 May 1983, printed as chapter 28 of that year's public general acts. Section 26 and Schedule 5 created, for shares issued in the 1983-84 tax year and the following three years, a new relief for "investment in corporate trades," replacing the narrower relief for "new corporate trades" the Finance Act 1981 had introduced two years earlier. Schedule 5, Part I states the relief applies where an individual "subscribes for eligible shares in a qualifying company" issued "for the purpose of raising money for a qualifying trade," gives the relief as a deduction of the subscribed amount from total income, sets a minimum subscription of £500 per company per year, and caps relief at £40,000 per individual per year. The statute's own text does not use the phrase "Business Expansion Scheme."

What the sources establish

A House of Commons Library research briefing, last updated 28 May 2008, supplies the name and context the statute's own text omits: it states "the Business Expansion Scheme (BES) was introduced in 1983... replacing the more restrictive Business Start-up Scheme introduced two years before," quotes Chancellor Geoffrey Howe's 1983 Budget statement announcing a "major extension" of the earlier scheme, and confirms the same £40,000 annual limit. That briefing is the government's own published account, produced for Members of Parliament, and it is where the "BES" label and its later history — including a 1988 extension into private rented housing and abolition from 31 December 1993 — are documented, not in the statute itself.

Scope and revision

The 1983 relief applied only to new ordinary shares carrying no preferential dividend or redemption rights, held five years, in unquoted trading companies; it excluded quoted companies and applied to new financing rather than purchases of existing holdings. The scheme was amended repeatedly and, per the same briefing, ended for shares issued after 31 December 1993, having already been altered by the 1988 extension. The Enterprise Investment Scheme that followed in 1994 has its own separate qualifying conditions, not detailed here, which should not be assumed identical to the 1983 scheme's rules.

The decision in front of you

A reader tracing UK venture tax relief back to the Business Expansion Scheme should treat the 1983 Act's own text as authority for what the original relief actually required — the share type, the holding period, the £40,000 cap — and the Commons Library briefing as authority for the scheme's name and history, rather than assuming either document alone tells the whole story.

• Does a description of the Business Expansion Scheme distinguish its 1983 rules from the 1988 extension into rented housing?
• Is a UK tax-relief comparison using the 1983 scheme's £40,000 limit, or an unremarked figure from another scheme?
• Does the source treat the Enterprise Investment Scheme as a continuation, or as a separate scheme with its own conditions?

The enacting text and the Commons Library's own account together separate what Parliament actually wrote in 1983 from the scheme's later, more eventful history, a distinction worth keeping before comparing it to any current relief.