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Raising Funds Under The Enterprise Investment Scheme

EIS or Seed EIS? Would you qualify?

 
 

POSTED BY HELEN BEAUMONT ON 23/06/2017 @ 8:00AM

Are you thinking of setting up in business, or have you just set one up? Do you want to raise finance? If so, have you considered raising those funds under the Enterprise Investment Scheme (EIS)?

If you're looking to raise funds, have you considered the Enterprise Investment Scheme?

If you're looking to raise funds, have you considered the Enterprise Investment Scheme?

copyright: everythingpossible / 123rf stock photo (licensee)

Tax relief is available under the Enterprise Investment Scheme (EIS) and Seed EIS to investors in high-risk start-up trading companies. This can provide investors with, amongst other things, Income Tax relief of up to 50% of their investment!

"This could make the difference between someone investing and not investing in your businesses!"

As with everything, there are difficult qualifying conditions that mean not all trades will qualify, and where a business does qualify they need to satisfy those conditions for a period of 3 years after the investment.

HMRC will give advance assurance to companies that request it, about whether they do satisfy the requirements for EIS and/or SEIS. This gives investors confidence before they invest that these reliefs are available. So what are the reliefs?

SEIS:

  • 50% Income Tax relief on investments up to £100,000 in a tax year

  • 100% Inheritance Tax relief provided the shares have been held for 2 years

  • 50% Capital Gains Tax re investment relief on gains made in the current or prior tax year

  • Tax free growth

  • Loss relief available against Income Tax

EIS:

  • 30% Income Tax relief on investments up to £1,000,000 in a tax year

  • 100% Inheritance Tax relief provided the shares have been held for 2 years

  • Capital Gains Tax deferral relief for the life of the investment

  • Tax free growth

  • Loss relief available against Income Tax

The shares must be held for at least 3 years, and if during that period one of the following events occurs, some or all of the relief may be clawed back:

  • The company fails to qualify

  • The individual sells or gifts the shares

  • The individual receives value from the company

Trades that are excluded include property developers, accountants, financial advisors and those in receipt of royalties.

However, many types of business do qualify, and so far I have advised and helped restaurant operators, software developers, a provider of gym and fitness services and technology and engineering based businesses to obtain advance assurance from HMRC on their EIS status.

Remember that the above is a very brief overview of what are complex qualifying conditions and professional advice should always be sought.

"Would you like to know more?"

If you're interested in raising funds for your business and would like to talk about the Enterprise Investment Scheme (or seed EIS) then do call me on 01908 774323 or click here to send an email enquiry and let's see how I can help you.

Until next time ...

HELEN BEAUMONT


PS:

If you're looking to work with an expert tax advisor with a wide range of tax experience, do visit www.essendontax.co.uk to find out more about me and discover how I can help!


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More about Helen Beaumont ...

Helen brings the personal tax planning experience of the top 20 tax companies to Essendon. Formerly of MacIntyre Hudson (with 45 offices nationwide), Helen worked at Chancery for more than 10 years before joining Essendon as the personal tax specialist.

Tax Planning can make a considerable difference to your tax liability. Helen’s specialist knowledge in tax planning and experience ensures every opportunity to minimise your tax bill is utilised. By analysing your investments, income, profit and expenditures, Helen will provide strategic tax planning expertise that could offer significant savings, whilst delivering clear, honest advice and guidance.

When Helen is not at Essendon she spends time with her young son and likes going on long walks with the family dog.