The Enterprise Investment Scheme (EIS) offers attractive tax breaks in the UK …
These benefits require an investment into shares of a small, unlisted company, not quoted on a major stock market, although it can list on smaller company markets such as AIM (formerly the Alternative Investment Market).
The tax benefits are credit that are applicable once the investment is made but the shares must be held for 3 years and the company must remain compliant with the regulations associated with SEIS and EIS companies for the benefits to remain in place.
Even after this period market for trading the shares will be narrower than with many other investments unless listed on a small company market, which is our goal.
EIS was introduced in 1994 and has provided a mechanism to help offset the investment risks with generous tax incentives with potential returns many multiples of the amount you invest.
Qualifying individuals are able to invest up to £2m into a EIS companies in a tax year.
Investors will benefit from income tax relief equivalent to 30% of the investment which can be used in the current tax year or carried back to the preceding tax year assuming there was a tax liability that year so triggering a refund from HMRC.
Any gain on the sale of shares will be exempt from CGT as long as the shares obtained income tax relief, which has remained in place, and are held for at least three years.
Shares, held for at least 2 years, receive 100% relief on their value.
Any losses can be offset against Income Tax in past or current years or CGT liability in current or future years.