Enterprise Investment Schemes

Enterprise Investment Schemes, EIS's, are collective investments which attract generous tax breaks to encourage investment in small, unquoted companies. Generally considered to be higher risk, EIS schemes reduce this risk by selecting a diversified spread of companies.

Enterprise Investment Schemes Tax Treatment

Income Tax Relief : You can receive income tax relief at up to 20% of the amount invested up to a maximum of £200,000 per tax year. To qualify, you must hold the EIS for at least three years.

Capital Gains Tax Deferral Relief : There is unlimited deferral of Capital Gains Tax arising on the disposal of any asset from the following 3 years and previous 12 months of an EIS Investment.

Capital Gains Tax Freedom : An EIS has no Capital Gains Tax liable on disposal of shares after 3 years, as long as no more than £200,000 was invested in each tax year.

Loss Relief : If you make a loss from selling your EIS shares, this loss can be set against your capital gains or income up to a rate of 40% in the tax year of disposal.

Inheritance Tax Exemption : EIS Investments are exempt from Inheritance Tax after 2 years.

Ethical Enterprise Investment Schemes

It is possible to invest in ethically screened and monitored, individually tailored Enterprise investment Schemes, with a minimum investment amount of £50,000. The objective of the Ethical EIS is to create a portfolio which puts the emphasis on investing in socially and environmentally responsible companies and to screen out companies which are involved in sectors such as tobacco, armament, alcohol, animal testing, or environmental exploitation. These are packaged products where due diligence has been applied to both the merits of the investment proposition itself and ethical factors which need to be taken into account. You can personalise and select your own criteria by completing an ethical questionnaire and this will be taken into account when the portfolio is constructed.

RISK WARNING : You should only invest money you can afford to lose with an EIS which is considered a higher risk investment more appropriate for client's who fully understand the nature of investment risk. The value of an EIS may go down as well as up and is likely to experience higher rates of volatility. Tax reliefs are subject to legislative changes. You could experience difficulty when disposing of shares, since they may be quoted on markets which are illiquid.

To request more information, an EIS application form and ethical questionnaire, please contact us.

For more information on EIS schemes in general, click here: Enterprise Investment Schemes or consult Wikipedia on Enterprise investment Schemes.