Often asked: What Is Eis Investment?

How does EIS investment work?

EIS is designed so that your company can raise money to help grow your business. It does this by offering tax reliefs to individual investors who buy new shares in your company. Under EIS, you can raise up to £5 million each year, and a maximum of £12 million in your company’s lifetime.

Are EIS a good investment?

A potential win for start-ups and investors. But EIS isn’t just potentially good for the investor. It’s been pivotal in ensuring start-ups in the UK can reach their potential. Under EIS, small businesses can raise up to £5million each year, and a maximum of £12million in the company’s lifetime.

What type of investment is an EIS?

The Enterprise Investment Scheme (EIS) is a government-backed initiative offering tax reliefs to investors who buy new shares in qualifying companies. This type of investing is for people who: Want to hold shares in small companies with potential to grow to many times their current value.

Who is eligible for EIS relief?

To qualify for this relief, income tax relief must have already been claimed – and not withdrawn by HMRC. Also, investors have to hold the shares for at least three years, and the company must remain EIS-qualifying for at least three years.

You might be interested:  FAQ: What Is Investment Management At Goldman Sachs?

How long does EIS last?

If you qualify as a Knowledge Intensive Company (KIC) your investment will get a time extension in that you qualify for EIS for 10 years from the start of trade date (instead of the 7 years with SEIS).

Is EIS high risk?

EIS companies are early-stage businesses, so investments into these companies are high risk. Investments could fall in value, potentially to zero, and investors may not get back their investment.

Why should I invest in EIS?

Up to 30% income tax relief, either against this year’s tax bill, or last year’s via a carry back facility. Ability to defer capital gains made elsewhere, by investing these in an EIS. Tax-free growth – no Capital Gains Tax liability if your investment does well.

How do I buy EIS shares?

You can invest into EIS-eligible businesses direct or via a fund. There are two ways of investing into an EIS-eligible investment opportunity: by investing directly into a single company or through an EIS fund where a fund manager builds your portfolio.

How do I claim an EIS loss relief?

Using a self-assessment form If you complete a self-assessment tax return, you can claim EIS losses against either income tax or capital gains tax by completing the SA108 form. Loss relief claimed through self-assessment may reduce the amount of tax that an individual needs to pay for the relevant tax year.

How is EIS relief calculated?

HOW MUCH RELIEF IS AVAILABLE? When you dispose of EIS shares at a loss, the Share Loss Relief rules allow you to deduct the amount of the loss either from capital gains or from your taxable income1. The value of the relief will be between 20% and 45% of your loss, depending on the rate at which you pay tax.

You might be interested:  Quick Answer: How To Become Investment Banker In Canada?

What happens if an EIS company goes bust?

Income Tax – Relief Withdrawal: – If the EIS company goes into liquidation within (generally) three years of the share issue, Income Tax relief originally given is clawed back. – However, if the value received on liquidation is considered insignificant or no value is received at all, no Income Tax relief is withdrawn.

Can I sell some of my EIS shares?

As EIS shares are not usually traded on the stock market, you cannot sell them the way you would sell an investment trust. Instead, it is the managers’ responsibility to design an exit strategy that allows them to return capital and any tax-free growth to investors.

When can I claim EIS tax relief?

You will normally claim EIS tax relief when you complete your tax return. You will be asked some information which is included in your EIS3 certificates. These are certificates you receive from each of the companies you invested in, typically a few months after the investment.

Is EIS relief available to companies?

Although the tax reliefs are available only to the investors, and not the company itself, the intention is that an EIS company will be attractive to potential investors, thus helping it raise finance.

Leave a Reply

Your email address will not be published. Required fields are marked *