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% perperson per year up to a maximum allowable investment of £1,000,000 in anysingle tax year.
  • • Unused capacity in any tax yearcan be carried forward to the following year, subject to the annual maximum.
  • • Investmentsneed to be held for three years for the benefits to be retained.

Capital Gains Tax (CGT)

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

Inheritance Tax (IHT)

  • • 100% relief from IHT after eachEIS qualifying investment has been held for at least two years. This isachieved through Business Property Relief (BPR) as all unquoted investmentsqualify 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, irrespectiveof the overall performance of the portfolio, can be offset against incomeearned in the tax year of the loss, or the previous year; or against capitalgains (including against any tax liability that arises on the revival of thedeferred gain) of the tax year of the loss and future years.

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