The Enterprise Investment Scheme (EIS)
At SMH Chartered Accountants, our expert staff are on hand to assist with all tax responsibilities. We offer a range of services to help you manage your taxes and can help you with the Enterprise Investment Scheme (EIS).
What is the Enterprise Investment Scheme (EIS)?
The Enterprise Investment Scheme (EIS) is a government initiative designed to encourage investment in small and medium-sized enterprises (SMEs) by providing a range of tax reliefs to investors who purchase new shares in qualifying companies.
The scheme offers generous income tax relief, capital gains tax (CGT) deferral relief, and loss relief to investors who meet the qualifying criteria. The aim is to encourage investment in early-stage companies by reducing the risks associated with investing in start ups and providing incentives to investors.
How does the EIS work?
The EIS works by offering tax incentives to investors who purchase new shares in qualifying companies. To qualify for EIS relief, the company must be unquoted and have gross assets of less than £15 million at the time the shares are issued. The company must also have fewer than 250 full-time equivalent employees.
Investors can claim income tax relief at a rate of 30% on the amount invested up to a maximum of £1 million per tax year. This means that an individual can receive a maximum tax relief of £300,000 per tax year. The shares must be held for a minimum of three years to retain the tax relief.
In addition to income tax relief, the EIS also offers capital gains tax deferral relief. Investors can defer the capital gains tax on any gains they make on the disposal of other assets by investing the gains in EIS qualifying shares. This deferral is available for gains realised up to three years before or one year after the EIS investment.
Finally, the EIS offers loss relief. If the EIS shares are sold at a loss, investors can claim relief equal to their marginal rate of income tax on the amount invested, less any income tax relief already claimed.
There are very stringent conditions associated with both EIS reliefs so any advice you act on should be given by a very experienced tax practitioner and implementation should be supervised by the same.
How can SMH Group help?
Our team of experienced tax professionals can help you navigate the complex rules surrounding the EIS and help you maximise the tax relief available. We can provide advice on the suitability of the scheme for your specific circumstances and help you identify suitable investment opportunities.
We can also assist with the preparation of EIS applications and ensure that all the qualifying criteria are met. Our team can help you identify any potential pitfalls and help you structure your investment to maximise the benefits of the scheme.
The Enterprise Investment Scheme (EIS) can offer a range of tax incentives to investors who purchase new shares in qualifying companies. If you are interested in learning more about the EIS or would like to discuss how it could benefit you or your business contact the SMH Chartered Accountants team on info@smh.group or 0114 266 4432 to learn more about Enterprise Investment Scheme and how we can help you.