Enterprise Investment Schemes

Enterprise Investment Schemes, EIS's, are a Government incentive to encourage investment in small, unquoted businesses. In return for increased risk, there are various tax benefits in return. EIS schemes aim to reduce this risk by investing in a diversified spread of companies. The inherently higher risks associated with start up, AIM listed and unquoted stock are further reduced by the generous tax breaks. These include:

• Income Tax Relief : reduces income tax liability by an amount equal to 20% of the amount invested up to a maximum of £200,000 per tax year. The EIS must be held for at least three years from the date of investment.
• Capital Gains Tax Deferral Relief : unlimited deferral of Capital Gains Tax arising on the disposal of any asset from the following 3 years and previous 12 months of an EIS Investment.
• Capital Gains Tax Freedom : no Capital Gains Tax payable on disposal of shares after 3 years, provided no more than £200,000 was invested per tax year.
• Loss Relief : if EIS shares are disposed of at any time at a loss, such loss can be set against the investor’s capital gains or income up to a rate of 40% in the year of disposal.
• Inheritance Tax Exemption : EIS Investments are exempt from Inheritance Tax after 2 years of holding such investment.

Charges

Initial charge - 3% of the amount invested.

Annual Management Charges - 2.25% of the value of the funds, plus VAT where applicable.

RISK WARNING : You should not invest unless you have read and fully understood the EIS share prospectus; are aware of the risks involved; are prepared to hold for the long term and can afford to risk making a loss. In some circumstances unquoted (including AIM, Ofex) shares may be considered illiquid and you have difficulty in selling these investments at a reasonable price, if at all. You should carefully consider whether such investments are suitable for you. An investment in an EIS is suitable only for well-informed investors and should be regarded as high risk - should you have any doubts about the suitability of this investment please consult with a professional adviser in accordance with Financial Services and Markets Act 2000. The value of shares held within an EIS may go down as well as up. You may not receive back the same amount as you originally invested. The amount of tax relief may change in the future, in line with changes to legislation.

To request more information, an EIS application form and ethical questionnaire, please contact us.

For more information on EIS schemes in general, click here:

Enterprise Investment Schemes