The Enterprise Investment Scheme (or EIS) is an incentive set up by UK government to encourage individuals to invest in small businesses.
It offers quite a few tax reliefs to investors:
1. Tax reliefs when you invest
- 30% Income Tax Relief: for £10,000 investment, your income tax is reduced by £3,000 that year. If your tax bill for the year is less than the relief you can “Carry Back” some or all of it to the previous tax year.
- Capital Gains Deferral Relief: your CGT can be deferred when the gains are invested in EIS qualifying company.
2. Tax reliefs when you exit your investment
- 100% Capital Gains Tax Exemptions: all your gains from selling your EIS shares are exempt from Capital Gains Tax. They must be sold 3 years or after and you must have claimed some Income Tax Relief
- 100% Loss Relief: your net losses can be set against your Income or Capital Gains Tax.
3. Additional reliefs
- 100% Inheritance Tax Relief: the inherited shares get full IHT relief in case of the investors death after 2 years.
How to invest in EIS companies
We strongly recommend you take advantage of EIS (and also SEIS, a similar scheme, but focused on even smaller, younger companies).
You can easily find EIS eligible companies through:
The maximum amount you can invest is £1,000,000.
Can TaxScouts help with EIS reliefs?
Our accountants can tell you exactly what information we need from you, then file your Self Assessment tax on your behalf.