Enterprise Investment Scheme
EIS - What is it?
An Enterprise Investment
Scheme (EIS) is a highly
tax efficient proposition that is intended to
encourage equity investment in small to medium sized
UK unquoted companies. The unquoted companies must
be ‘qualifying’ companies in that they do not
partake in trades associated with land, property
development, financial investments, farming and
forestry.
They are one of the most tax
efficient investment products available to UK
investors. They are particularly suited to those
investors who are looking to defer capital gains.
The main advantage with EIS
structures and the reason they have proved so
popular to investors is that not only are all
capital gains tax free but investors also receive
20% income tax relief on amounts invested, provided
that the shares are retained for three years. This
means that if you invest £10,000, the Inland Revenue
will reduce your income tax bill by £2,000.
Who is it for?
Enterprise Investment Schemes are
aimed at investors who may have large income and
capital gains tax liabilities who wish to invest for
the medium to long term and are prepared to take
some investment risk.
How does it work?
The EIS scheme is intended to
provide tax incentives to encourage investment in
qualifying unquoted trading companies. The
company’s gross assets must not exceed £7 million
before investment.
Individual access to these
companies will often be through a portfolio or
pooled investment run by a Manager. The objective
is generally to achieve capital growth over the
medium to long term whilst also creating tax
efficiency.
Tax situation
EISs take advantage of some of
the major tax incentives introduced by the
Chancellor for investors in private companies. These
tax benefits have the effect of greatly increasing
the return and reducing the risk of your investment.
Whatever your financial advice requirements are,
you can be assured that Ashton Hoyle are well
positioned to provide an innovative answer and we
look forward to speaking to you on any financial
matter. Contact us now
to see how we can help.
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