The UK’s U-Turn on Financial Promotion Amendments

On 31 January, the UK made amendments to the Financial Services and Markets Act, changing the thresholds for High Net Worth Individual and Self-Certified Sophisticated Investor status.

These amendments were met with harsh criticism by many in the venture capital and start-up community, arguing that these higher thresholds would have a significant impact on the funding of start-up companies, as well as on early stage private capital fundraising. These amendments were also seen to disproportionately affect women and ethnic minority investors who benefit from investment from these types of investors.

On 6 March, the UK reversed these changes, and reinstated the previous thresholds. In summary, this means to be considered a High Net Worth Individual, an investor must have;

  • Annual income of £100,000 in the last financial year (down from £170,000)
  • Net assets of £250,000 throughout the last financial year (down from £430,000)

In addition, the requirement to have made more than one investment in an unlisted company in the last two years to be able to self-certify as a Sophisticated Investor has been reintroduced. Further, the Company Director threshold has been reduced to £1m of annual turnover (reduced from £1.6m).

These changes will come into effect on 27 March 2024.