Enterprise Investment Scheme
Investors are becoming increasingly attracted to the 'high risk, high reward' area of EIS funding with its growth potential and significant tax relief.
BTG Corporate Finance can advise small business owners and potential investors on how to make the Enterprise Investment Scheme (EIS) work best for you.
Following its introduction in 1994, EIS funding has grown in popularity and now plays a fundamental role in helping start-ups and other small/medium businesses across the UK expand further; vital for the economy as a whole. A well-managed EIS investment portfolio a very compelling proposition for investors too,
In recent years, we've seen an increasing amount of investors – particularly at the SME end of the market – being attracted to the 'high risk, high reward' area of EIS funding with its high growth potential and significant tax relief. A well-managed EIS investment portfolio can now prove to be a very compelling proposition for investors – a key reason being the tax incentives available:
- Investors can claim income tax relief on up to 30% of the value of their EIS investment (up to a current maximum of £1 million invested in each tax year).
- Investors won’t be required to pay any tax on gains made from the sale of their EIS shares, it held for the qualifying period (currently three years) before disposal and providing that income tax relief against their income or capital gains in the year of disposal with given (and not withdrawn)
- Investors facing capital gains tax liabilities on other investments can use their EIS investment to defer the capital gains, if made up to one year before or three years after the disposal of the original asset
- EIS investments generally qualify for inheritance tax exempt, after they have been held for two years, as long as the investor still owns the EIS shares when they die.
- Investors can apply for loss relief against their income or capital gains in the year of disposal on any holding within their EIS portfolio that is sold at a loss.
- The maximum that a company can receive in EIS investment is currently £5m
With any high risk investment, however, it is crucial to seek expert financial advice. EIS opportunities do carry high reward potential but with small businesses having a higher rate of failure than established businesses, it is important that thorough analysis and forecasting is undertaken.
So, for individuals making EIS investments debt, equity, or both; you need advice that they can trust from advisors who will take a lead role in managing an investment opportunity to a successful completion. Rather than simply identifying and highlighting potential issues, we make it our responsibility to recommend creative and appropriate solutions to such issues as or before they arise.
We also have clients who are seeking EIS funding. To receive details of these future investment opportunities, please complete our Investment Register.
For more information or a free consultation to discuss EIS opportunities, contact BTG Corporate Finance today.