What is EIS?
The Enterprise Investment Scheme is designed to encourage private investment into growing British companies, by offering attractive tax reliefs.
It is one of the UK Government’s flagship policies for supporting British enterprise, stimulating approximately £1billion of private investment each year.
EIS TAX RELIEF
If you invest in EIS-qualifying companies, and depending on your personal circumstances, you may benefit from:
- 30% income tax relief – your income tax bill can be reduced by 30% of the amount invested into EIS. This relief can be applied to the tax year in which you purchase the shares, or carried back to the previous year.
- Tax-free gains – gains on EIS investments are not subject to Capital Gains Tax (CGT).
- CGT deferral – if you owe tax on another gain, for example from the sale of a share portfolio or investment property, you can defer the payment of CGT by investing the value of the gain into EIS-qualifying companies.
- Loss Relief – if your EIS investments underperform, you can offset any losses against other income or gains.
- Inheritance Tax relief – if held for two years, and still held at the investor’s death, EIS investments may be exempt from Inheritance Tax.
HMRC ENCOURAGES AND APPROVES
HMRC have recently released their report on the EIS and SEIS scheme.
This focuses on the amount of private capital flowing into start-ups, with the report highlighting that the scheme continues to be in good health despite the impact of the Covid-19 pandemic.
In 2020-2021, £1.658bn was invested via the EIS scheme, into 3755 different companies. £358m of which went into companies receiving EIS money for the first time.
Although investment throughout the first 3 quarters of 2020-2021 dipped below the same period in 2019-2020, in the final quarter, investment (as well as applications for Advanced Assurance) bounced back to pre-pandemic levels highlighting the resilience of the market.
We expect this trend to continue as UK early-stage companies achieve significant growth, earlier this year it was reported that there are now 85 unicorns created in Europe, with 41 of these in the UK.
We've seen this growth reflected in the performance of our EIS partners, which has an average of 32-36% ROI over the last 5 years and three tech exits!
To find out more information on EIS investments and the opportunities available, please complete the form below.
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