ENTERPRISE INVESTMENT SCHEME
The Enterprise Investment Scheme is one of the Venture Capital Schemes designed to help young, high-risk trading companies raise funds by offering generous tax reliefs to investors who buy new shares in the company.
Investors can claim tax relief on up to £1 million worth of investments per year, and £2 million worth of investments per year if half of this is invested in knowledge-intensive companies. EIS-eligible investments can also be applied to the previous tax year.
Investment can be received under EIS only if it is within 7 years of your company’s first commercial scale.
RELIEF
Income Tax Relief
You will be able to claim up to 30% of the value of your investment. For example, if you make an investment of £20,000, you will be able to save £6,000 in income tax.
Capital Gains Tax Relief (CGT)
There are 2 types of CGT reliefs claimable with the EIS scheme:
Disposal relief: if an investor sells their shares after 3 years, they will be exempt from CGT on investment gains.
Deferral relief: if an investor disposes of an asset and uses the gain to invest in shares in a company that qualifies for EIS, they will not have to pay CGT until the EIS share has been disposed of.
Loss Relief
If the company fails, the investor may claim loss relief. The amount of loss relief you can claim is equivalent to the rate of income tax you pay. For example. if you pay a rate of 45% of income tax, you will be able to claim up to 45% of your net loss in income tax relief.
