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Enterprise Investment Scheme
The Enterprise Investment Scheme (EIS) and more recently the Seed Enterprise Investment Scheme (SEIS) offers exceptional tax benefits to UK investors who invest in qualifying companies. These benefits include:
- Income tax relief on your investment.
- Capital gains tax exemption.
- CGT deferral relief or CGT reinvestment relief.
- Loss relief.
- Business relief.
As a qualifying investment has loss relief and income tax relief this reduces the risk exposure on any investment. Whilst income tax relief and capital gains tax exemptions potentially increase an investment’s real return. As a result, a qualifying investment can be far more attractive to an investor.
The government is happy to offer generous tax breaks to investors, as qualifying companies can stimulate the economy by generating economic growth. This creates a win-win for all parties involved.
At Esper Wealth we are targeting rapid growth. This is why we are working with high-net-worth and sophisticated investors to raise equity finance. If you meet the qualifying criteria and would like to know more then contact investor relations.
What is EIS Income Tax Relief?
This is a government backed investment scheme, that was introduced in the UK in 1994 to connect promising growth companies with private investors. To date, the scheme has raised over £24 billion for more than 33,000 SMEs. This scheme has grown in popularity due to the generous tax reliefs the scheme offers to investors.
How do I Claim EIS Relief on my Taxes?
EIS income tax relief allows investors to claim 30% income tax relief on eligible investments up to £1 million per tax year. For knowledge-intensive companies, investors can put in up to £2 million each with the same tax benefits. This tax relief alone could amount to a maximum potential tax bill reduction of £600,000 per year.
How is EIS Tax Relief Calculated?
Some tax reliefs (such as CGT exemption) are automatic reliefs and so no nothing is required to claim them. For tax reliefs that do require action, reliefs are usually claimed either by submitting an EIS3 form (delivered to investors following share issue) to the HMRC, or by including the details of eligible investments upon completion of their annual tax return.
Who can Claim EIS Relief?
In order to be eligible to claim EIS relief, investors are required to be UK residents (or have UK tax liabilities). Additionally, investors cannot have a significant financial connection to the company at least two years before and three years after the investment is made.
What is EIS Deferral Relief?
Deferral relief allows an investor to defer the CGT due on the disposal of any asset (or a gain deferred previously) when the value of that gain is invested into EIS shares. This is especially of interest to property investors due to the large transactions and higher taxable gains rates.
Are EIS Investments Exempt from Inheritance Tax?
Any investment made via the scheme is exempt from inheritance tax once it has been held for at least two years. This is the point at which it will qualify for Business Relief. This gives shares the ability to be passed on without being liable to the usual 40% IHT due on estates worth over £325,000.