30% tax relief:

Enterprise Investment Scheme

 

 

Risk Warning: Tax relief depends on an individual's circumstances and may change in the future. In addition, the availability of tax relief depends on the company invested in maintaining its qualifying status.

 


What is EIS?

 

Launched in 1994 as the successor to the Business Expansion Scheme, and with the aim of encouraging private investment into unlisted companies, the Enterprise Investment Scheme has promoted investment of over £9.7bn since it started.

While EIS has been around going on two decades, its success has led to the government’s more recent introduction of the Seed Enterprise Investment Scheme (SEIS), which specifically targets companies in their first two years looking to raise that first £150,000 in funding.

 


Why invest in EIS with SyndicateRoom?

 

  • Image showing Enterprise Investment Scheme tax relief

     

    Keep all the tax and other benefits of the Enterprise Investment Scheme

  • Our investment network is free to join

     

    Our investment network
    is free to join

  • Choose the businesses you invest in and the Business Angels you invest with

     

    Choose the businesses you invest in and the Business Angels you invest with

  •  
  • Invest with the knowledge that a business angel has invested their own money into the opportunity

     

    Invest with the knowledge that a business angel has invested their own money into the opportunity, unlike most EIS funds

  • With a minimum investment amount of £1000, it’s easy to create a diversified portfolio

     

    With a minimum investment amount of £1,000, it’s easy to create a diversified portfolio


Tax reliefs available through EIS

 

As an investor you can take advantage of the following reliefs on up to £1m of investment made into EIS-eligible companies per year:

  • Income tax relief of 30% of your investment. This can be used in the year of investment or carried back one-year prior
  • Capital Gains exemption on profits earned on shares held for a minimum of three year
  • Loss relief, should the company you’ve invested in fail, equivalent to your tax bracket multiplied by your 'at risk capital' (the total loss on the shares once income tax relief has been accounted for)
  • Capital Gains deferral on gains realised on the disposal of any asset which is reinvested in an EIS eligible company
  • Inheritance Tax exemption on shares held for a minimum of two years

 


Examples of EIS tax relief

 

Company you've invested
in doubles in value
coins.svg
  •  

    You've
    invested
    £10,000

  •  

    You receive
    £3,000
    in income Tax relief

  •  

    Hold onto the shares for at least 3 years and when you sell them for £20,000, you will owe no capital gains tax on profit

  •  

    Total gain to you is £13,000 (£10,000 from the sale plus £3,000 from the income tax relief)

Company maintains
the same value
scale.svg
  •  

    You've
    invested
    £10,000

  •  

    You receive
    £3,000
    in income Tax relief

  •  

    You sell your shares for the £10,000 price you paid

  •  

    Total gain to you is £3,000 (Your initial investment was returned plus you received £3,000 from the income tax relief)

Company
goes bust
piggybank.svg
  •  

    You've
    invested
    £10,000

  •  

    You receive
    £3,000
    in income Tax relief

  •  

    The company then goes bust and your shares are worth £0

  •  

    You receive loss relief from the government equal to your at risk capital (in this case the £10,000 invested - £3,000 received in Income Tax Relief), multiplied by the percentage tax bracket you belong to.
    At a tax bracket of 45%, the loss relief will be £7,000 x 45% = £3,150.
    Therefore, for £10,000 invested, your real loss is £7,000 - £3,150 = £3,850

 


How to claim your EIS relief

 

Before you can claim EIS tax relief you must have received an EIS3 form from the company in which you have invested. Your claim can be made on the Self-assessment tax return for the tax year in which the shares were issued. If the shares were issued in a previous year, and/or if the claim is for capital gains deferral relief, the claim part of the form EIS3 must also be completed and sent to your tax office. Claims for relief can be made up to five years after the first 31 January following the tax year in which the investment was made.

For full details feel free to read the HMRC EIS Guidelines

 

EIS Tax Relief Report