A complete guide to the Enterprise Investment Scheme (EIS)
Learn about which companies qualify, the benefits, how to invest, risks, tax relief and transferral or inheritance
The Enterprise Investment Scheme (EIS) is a government incentive that provides a valuable source of funding to early stage companies, while offering tax benefits to investors. This guide marks out which companies qualify, the benefits, how to invest, risks, tax relief and transferral or inheritance of EIS shares.
Introduction to EIS
This section explains what EIS is, the purpose of the scheme and the benefits to EIS investors and
EIS-qualifying companies. We also cover the rules for EIS eligibility and how invested funds must be used.
1. What is the Enterprise investment scheme (EIS)?
2. What kind of company qualifies for an EIS investment?
Investing in EIS
Learn about the different ways of participating in EIS and why you might consider EIS as an investment vehicle. It’s important to know that EIS investments tend to be high risk, and this section also explains those risks.
3. Two ways to invest in EIS
4. Why invest in EIS?
5. Understanding the risks of EIS
Income tax, capital gains tax and inheritance tax
Learn the basics about income tax, capital gains tax and inheritance tax,
and how they relate to EIS investments.
6. Income tax, capital gains tax and inheritance tax: the basics
EIS Tax Relief
EIS investors can benefit from five different tax reliefs if they invest in an EIS qualifying company:
income tax relief, tax-free growth, loss relief, capital gains deferral and inheritance tax relief.
7. EIS tax relief
8. EIS loss relief
9. How and when to claim EIS tax relief
Transferring or Inheriting EIS shares
If you want to transfer ownership of an EIS investment, there are certain rules that apply to the tax reliefs. These rules define how the original investor and beneficiary are affected, which depends whether the EIS investment is a gift or inheritance.
10. Married spouses and EIS
11. Other beneficiaries and EIS shares
Learn about important factors that investors need to think about
when choosing the EIS investment that’s right for them.
12. Things to consider when choosing an EIS investment
Our investment products put capital at risk
The value of an EIS investment can fall as well as rise. Investors might not get back the full amount they invest.
Tax treatment depends on individual circumstances and might change in the future. Tax reliefs depend on companies maintaining their EIS-qualifying status.
Investors need to hold shares for three years to keep any tax reliefs claimed. Investors should be prepared to hold their shares for significantly longer to allow time for growth and exit.
Investments in smaller companies can fall or rise in value much more sharply than shares in larger, more established companies. They can also be harder to sell.
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