When George Osborne stood up in the House of Commons to deliver his second Budget last week, he wanted to make a strong, pro-business statement. In fact he went as far as to say he wanted to make the UK the “best place in Europe to start, finance and grow a business”.

One of the main tools he used to try to achieve this aim is the almost complete revamping of the rules for Enterprise Investment Schemes (EIS).

The aim is to make them a true driver of business growth by making them increasingly attractive to private investors and at the same time opening them up so more companies can benefit from their funding.

EIS were unveiled in November 1993, with the aim of assisting small, higher risk, unquoted trading companies to raise capital by offering a range of tax incentives to investors.

The main attraction for private investors is the tax relief available on money they put into EIS.

The Chancellor will raise the tax relief on enterprise investment schemes from 20 per cent to 30 per cent from April this year.

Equally importantly investors will now have a maximum of £1 million that they can invest in EIS each year and still benefit from the tax breaks, up from the previous from £500,000.

Both these factors make EIS a much more attractive proposition for investors, especially high earners who have seen their tax free pension contribution allowance reduced substantially.

One issue this does raise is if you are thinking of investing in an EIS now, how does an investor maximise their income tax relief?

The 30 per cent relief only applies for investments made in tax year 2011/12. Any investments made in 2010/11 or carried back to previous tax years will receive 20 per cent relief.

Investors into so-called Approved EIS schemes need not worry about the change, as they receive tax relief when the money is finally invested in the individual businesses in the EIS.