THE ENTERPRISE INVESTMENT SCHEME (EIS)

The Enterprise Investment Scheme (EIS) is a government sponsored investment scheme, offering a range of tax relief benefits to investors who invest in smaller high-risk companies which are not listed on the stock exchange.

The following information has been sourced from the official HM Revenues and Customs website; please refer to their website for more details on the following guidelines.

Benefits of EIS investment

30 % Tax Relief for Current or Previous Tax year.
No Inheritance Tax after 2 years.
No Income Tax OR Capital Gains on any Profits.
Deference of any forms of Capital Gains for 3 years back to 1 year forward.
Loss Relief on any monies lost at your current tax rate.
Investors must keep their shares for at least 3 years to benefit from EIS.

SEED ENTERPRISE INVESTMENT SCHEME (SEIS)

The Seed Enterprise Investment Scheme (SEIS) offers great tax efficient benefits to investors in return for investment in small and early stage start-up businesses in the UK.

Benefits of SEIS investment

An investment up to a maximum of £100,000 may be placed by an SEIS investor in a single tax year. This can be spread over a number of projects.
SEIS investors may not control the company receiving their capital, nor may they hold more than a 30% stake in the company in which they invest.
50% Tax Relief for current or previous Tax Year (from date of Share Certificate).
50% Capital Gains write off from current Tax Year.
No Inheritance Tax after 2 years.
No Income Tax or Capital Gains on any Profits.
Loss Relief on any monies lost at your current tax rate.
Monies must remain in the company for 3 years to benefit from SEIS.

INCOME TAX RELIEFS

The Enterprise Investment Scheme (EIS) is a government sponsored investment scheme, offering a range of tax relief benefits to investors who invest in smaller high-risk companies which are not listed on the stock exchange.

Example: Jenny invests £20,000 in SEIS shares in the 2012 to 2013 tax year in SEIS. The relief available is £10,000 (£20,000 at 50%). The amount owed for the year (before relief) is £15,000 which she can reduce to £5,000 as a result of her investment.

Example: James invests £20,000 in the 2012 to 2013 tax year in shares. The relief available is £10,000 (£20,000 at 50%). The tax owed for the year (before relief) is £7,500. James can reduce his tax bill to zero as a result of his SEIS investment, but loses the rest of the relief available.

Benefits of EIS investment

Income Tax relief is available to individuals who subscribe for qualifying shares in a company which meets the SEIS requirements, and who have UK tax liability against which to set the relief. Investors don’t need to be UK resident.