Tax

There are a range of tax reliefs available to most investors who invest in venture companies. The list below provides a brief introduction to these tax reliefs under the Enterprise Investment Scheme (EIS). These benefits depend on your own tax position and they may be subject to change in the future. If you are uncertain of your own tax situation, you should seek professional advice from a qualified tax adviser.

TAX

30% UpfrontTax Relief

  • • Relief at a rate of 30% per person per year up to a maximum allowable investment of £1,000,000 in any single tax year.
  • • Unused capacity in any tax year can be carried forward to the following year, subject to the annual maximum.
  • • Investments need to be held for three years for the benefits to be retained.

Capital Gains Tax (CGT)

  • • There is no CGT on the disposal of shares which have been held for at least three years in EIS Qualifying Companies.
  • • Deferral Relief. CGT due by the investor on the sale of any assets may be deferred through an EIS qualifying investment. There is no limit on the amount of gain that may be deferred. The EIS investment must be made within one year before or three years after the date of the disposal of the assets which give rise to again.

Inheritance Tax (IHT)

  • • 100% relief from IHT after each EIS qualifying investment has been held for at least two years. This is achieved through Business Property Relief (BPR) as all unquoted investments qualify for BPR.
  • • In orderto qualify, the investments must also be held at the time of death.

Loss Relief

A loss on any qualifying investment in the portfolio, irrespective of the overall performance of the portfolio, can be offset against income earned in the tax year of the loss, or the previous year; or against capital gains (including against any tax liability that arises on the revival of the deferred gain) of the tax year of the loss and future years.

  • • Can provide total tax relief of up to 61.5% for an additional rate (45%) tax payer
  • • An investor can choose whether to set the loss relief against other gains made now or in the future, or against income for the year in which the loss arises or the previous year.