Enterprise Investment Scheme (EIS)

Introduced in 1994 to help small unquoted British trading companies EIS provides valuable tax reliefs for investors. Sheen Stickland offers expert advice in respect of all areas of the EIS legislation and a fully managed implementation depending on your specific requirements.

Overview of EIS

EIS provides tax reliefs for investors who subscribe for shares in smaller unquoted trading companies. The scheme can be used to raise finance for a start up business or expansion of an existing business.

There are three main tax reliefs available to EIS investors:-

  1. Income Tax relief on the cost of the original investment – income tax relief at a rate of 30% can be secured on an investment in EIS eligible shares, subject to an annual limit currently £1,000,000.
  2. Capital Gains Tax exemption on the disposal of the investment – a capital gain arising on the disposal of EIS eligible shares is exempt from tax.
  3. Capital Gains Tax deferral – capital gains tax realised on the disposal of another asset can be deferred by reinvesting the gain.

As is always the case with complex tax legislation there are a number of pitfalls within the EIS provisions that companies and investors need to be aware of. It is therefore important that advice is taken before the investment is made to ensure that any such issues are identified and, where there are any elements of concern, obtain HMRC clearance in respect of the companies EIS status before subscriptions for shares are invited.

Why choose us?

Sheen Stickland have first hand experience in guiding clients through the EIS legislation including liaising with HMRC and can advise on:-

  • The investment structure,
  • Whether the company would satisfy the EIS conditions,
  • Clearance procedure,
  • Completion of the relevant documentation.

If you would like to discuss EIS in more detail please contact either Harriet Sergeant or Colin Matthissen.

 

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