EIS Tax Reliefs Available
Investors can, depending on their individual circumstances, enjoy some or all of the tax benefits available under the Enterprise Investment Scheme. The following is a general summary of the main current tax advantages that may be available to an Investor under the Enterprise Investment Scheme in respect of an investment made in an Investee Company during the tax year.
- Investors may claim up to 30% income tax relief, up to a maximum individual investment of £2m per tax year, subject to at least £1m being invested in Knowledge Intensive Companies.
- CAPITAL GAINS TAX DEFERRAL of unlimited gains on the sale of any assets if an EIS investment made within one year before or three years after the date of the disposal of the assets which give rise to a gain.
- NO CAPITAL GAINS TAX on the disposal of shares which have been held for at least three years in EIS Qualifying Companies.
- 100% INHERITANCE TAX EXEMPTION through the availability of Business Relief may be available after EIS qualifying investment has been held for at least two years.
- LOSS RELIEF providing total tax relief of up to 61.5% for a 45% tax payer.
- CARRY BACK relief claims may be made for amounts subscribed for shares in EIS qualifying companies, such that an investment is treated for income tax relief purposes as having been made in the previous tax year, subject to maximum investment levels for that tax year.
The above tax advantages can only be claimed when the investors funds have been deployed into a company, rather than when an investor makes an initial subscription. There is no limit to the amount of gains that can be deferred for CGT purposes.
The above does not constitute tax advice to any person: it is recommended that investors take independent, tax, legal and financial advice from a qualified professional adviser before considering an investment
Please note that tax benefits depend on personal circumstances, are not guaranteed, and rely on UK Tax Legislation which may change in the future. Investments in unquoted companies carries high risks and investors could lose all funds invested. Investors should not invest if capital is required in the near term. No established market exists for the trading of shares in private companies, making it difficult to sell shares.