At Schoolgate we are often asked by our clients “what reliefs are available to lower our tax liability?” And the answer is very often “Enterprise Investment Scheme Relief (EIS)” or “Seed Investment Scheme Relief (SEIS)”
EIS/SEIS offers substantial tax incentives to investors in companies that qualify. Here is a brief overview of tax reliefs under SEIS/EIS:
- income tax relief for the investor of up to 30% (50% for SEIS) of the amount invested
- disposals of EIS/SEIS shares after three years may be free from capital gains tax
- capital gains tax deferral relief allows investors disposing of any asset to defer gains against subscriptions in EIS shares
- losses on EIS shares may be offset against taxable income
- EIS/SEIS investments should qualify for IHT business property relief after two years’ ownership
- Carry back option available to the previous tax year
The tax incentives for EIS investments are intended to encourage investment in owner-managed companies. The availability of EIS relief, together with a solid business plan, is a strong draw for investors. Many EIS investors are sophisticated serial investors and will want to minimise their potential exposure as much as possible Therefore, there are stringent conditions associated with EIS reliefs and tax advice on EIS should be undertaken and supervised by a suitable experienced adviser.
So if you are thinking about possible investments, get in touch with Schoolgate for some more specific advice on EIS/SEIS.