Enterprise Investment Scheme

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The Enterprise Investment Scheme (EIS) is a series of UK tax reliefs launched in 1994 in succession to the Business Expansion Scheme. [1] [2] It is designed to encourage investments in small unquoted companies carrying on a qualifying trade in the United Kingdom. [3]

Contents

By the end of the 2014–15 tax year, a cumulative total of £14.2 billion had been invested under the scheme into approximately 25,000 companies. In that year, in excess of £1.8 billion was invested under the EIS. [4]

Purpose

Investment in companies that are not listed on a stock exchange often carries a high risk of loss of capital, and low market liquidity means that it may be difficult or time consuming to sell or realise the investment. The tax reliefs available under the EIS are intended to offer investors some incentive to counterweigh those risks. [3]

Provision of tax relief

The EIS offers several different kinds of tax relief, available both to direct investors and investors through a managed EIS fund or portfolio service. They are conditional upon the company receiving investment being a qualifying company under the scheme. [5] A brief summary of the tax benefits is as follows:

Qualifying companies and individuals

The rules for qualifying are complicated; for example, the following are some of the qualifications that must be met: [5]

The company

The individual

Seed Enterprise Investment Scheme

On 6 April 2012, the Seed Enterprise Investment Scheme (SEIS) was launched, with the goal to "stimulate entrepreneurship and kick start the economy." [14]

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References

  1. ↑ "New business expansion scheme may be too taxing (16 Apr 1994)". heraldscotland.co.uk. The Herald. 16 April 1994. Retrieved 17 January 2017.
  2. ↑ "The EIS evolution: How will incoming changes affect investors?". CityAM. 27 February 2019. Retrieved 3 June 2020.
  3. 1 2 Thorpe, David (5 October 2018). "Investment schemes offer tax relief to encourage investment in small or medium-sized companies". What Investment. Retrieved 3 June 2020.
  4. ↑ "Comments on the latest EIS and SEIS fundraising data from HMRC". Enterprise Investment Scheme Association. Archived from the original on 18 January 2017. Retrieved 17 January 2017.
  5. 1 2 3 4 "Introduction to the Enterprise Investment Scheme". gov.uk. Retrieved 17 January 2017.
  6. ↑ "Tax relief for investors using venture capital schemes". GOV.UK. HM Revenue & Customs. 25 May 2023. Retrieved 26 May 2023.
  7. ↑ Powley, Tanya; Vincent, Matthew; Ross, Alice; Lodge, Steve; Moore, Elaine (23 March 2011). "Budget 2011: what it means for you". The Financial Times. Retrieved 15 July 2012.
  8. ↑ Singh, Ajit. "The Human Heath EIS: Capital gains tax relief". o2h ventures.
  9. ↑ "EIS tax savings". Wealth Club. Retrieved 15 June 2017.
  10. ↑ "EIS". SyndicateRoom.
  11. ↑ "Enterprise Investment Schemes".
  12. ↑ "Enterprise Investment Scheme Excluded Trades". HMRC. Retrieved 26 September 2017.
  13. ↑ "The Enterprise Investment Scheme (EIS): Fully Explained". 21 February 2020.
  14. ↑ "Seed Enterprise Investment Scheme". SEIS Information. Retrieved 15 July 2012.
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