EIS Investment Opportunities
To download our infomation pack on the Integroe Ambulance Simply fill in your details below and click submit the documents will automatically download in a PDF format.EIS at a glance
The Enterprise Investment Scheme
(EIS) helps small, private companies
raise finance. As firms of this kind
are high risk, the Government offers an
array of tax reliefs to encourage wealthy and
sophisticated investors to invest in fledgling
businesses and help them grow.
This factsheet explains at a glance how
EIS works. It is an overview and you should
make sure you are familiar with the risks and
rules before making any decision. You should
invest based on the merits of the investment,
not for the tax advantages alone.
Mighty oaks from little acorns grow,
sometimes
Small and medium businesses are often
referred to as the engine room of the UK’s
economy. The most recent data available
shows they accounted for over 99% of all
UK private businesses, employing millions of
people and generating £trillions in turnover
each year. Whilst a handful of these small
companies may do well, many others will
struggle or even fail, so these are high-risk
investments.
The tax reliefs provided by EIS offer a
valuable buffer against the risks. The reliefs
can soften the blow of investments that don’t
work out. In the box opposite we highlight
five key tax advantages of EIS.
You could choose to invest in a single
company or a fund. Companies that can be
classified as ‘knowledge-intensive’ enjoy
preferential treatment – see more below.
What’s a knowledge-intensive company?
These are young and innovative businesses
that are heavily investing in R&D and are
developing intellectual property. So, for
instance, a young company which is working
on a new drug or treatment would likely
fall under the definition. A chain of shops
opening new sites most likely won’t.
HMRC has set specific requirements
a company must meet to be categorised as
knowledge intensive (KI).
Those that do are allowed to receive
more funding over a longer period of time. In
addition, investors can invest up to £2 million
in EIS, provided anything over £1 million is
invested in KI companies.
KI-approved EIS funds are relatively
new. They could make tax planning easier
for EIS investors by giving a set investment
date for income tax purposes and a single EIS5 certificate.
Tax advantages of EIS
1. Up to 30% income tax relief with
option to carry back to the previous
tax year
2. Tax-free growth – no capital gains tax
to pay on any gains
3. Defer capital gains made elsewhere
4. Loss relief – offset losses against
income or capital gains tax
5. IHT relief after two years
To benefit from the tax advantages,
certain conditions must be met, e.g. you
need to hold EIS shares for at least three
years to retain tax relief, and the investee
companies need to remain qualifying.
This is a brief overview and does not
cover all the conditions.
For more information on the Goverment EIS Scheme ……