Enterprise Investment Scheme
Enterprise Investment Scheme (EIS)
The Enterprise Investment Scheme (EIS) is a UK Government sponsored initiative to encourage investment in the UK’s enterprise market. Since the EIS scheme's underlying investments qualify for Business Property relief the value of the investment falls outside your Estate for IHT purposes after just two years.
Investment into a qualifying EIS provides the following tax benefits to holders of EIS qualifying shares:
- 100% relief from inheritance tax liability for EIS qualifying investments held in excess of than two years
- Tax free growth – no Capital Gains Tax (CGT) payable on gains realised on investment if EIS shares are held for 3 years plus
- 30% income tax relief for investments up to £1,000,000 p.a. against 2015/16 income, reducing net cost to investors to 70p per £1 invested
- Ability to offset capital losses – if EIS shares are disposed of at a loss, that loss can be set off against income in the year of disposal or previous year.
Enterprise Investment Schemes - Who provides them?
Enterprise Investment Schemes are offered by a number of specialist investment houses in the UK.
Enterprise Investment Schemes - How risky is this type of investment?
Investments in any EIS Funds involve investment in the UK's enterprise market, which by it's very nature is exposed to high degree of investment risk. Whilst the Enterprise Investment Scheme is considered to be on the higher end of the risk scale, in common with most kinds of investments available on the market, some EIS funds carry less risk than others.
Enterprise Investment Schemes - How can I minimise risk?
Always seek the assistance of a professional investment adviser when considering this kind of investment. Ensure that you deal with an investment house with substantial funds under management and can demonstrate a good track record and are specialists in this kind of investment.
Who is the Enterprise Investment Scheme suitable for?
The Enterprise Investment Scheme is suited to UK tax paying individuals to whom any of the following criteria apply:
- Would benefit from inheritance tax relief on their investments
- Able to commit capital for at least three years
- Income tax liability in 2015/16 and/or 2014/15
- Large capital gains to defer
Enterprise Investment Schemes - Government Wealth Warning
Whilst the present Government fully support investment into Enterprise Investment Schemes, this may be subject to change and the generous tax incentives can be decreased, increased or withdrawn at any time without notice.
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