What is an Enterprise Investment Scheme ?
This is a scheme which allows the investor exposure to high risk enterprise business with the incentive of tax relief. This type of scheme is a high risk one and not suitable for many investors. Schemes become available and the issues are quickly used up so if you are interested Nicholls Stevens can provide information on schemes which are available at that time
Features of these schemes
The schemes have income tax advantages. Income tax relief is available on newly issued Enterprise Investment Schemes. The relief is 20% for investments up to £500,000 in any one tax year. The relief is lost if the shares are disposed of within three years of acquisition. If needed the full amount invested in shares can be carried back to the previous tax years.
The schemes have Capital Gains Tax advantages . An EIS investor can defer all or part of any capital gain chargeable to tax to the extent of the EIS investment On disposal of the EIS holding the CGT becomes payable.
Any gain arising from the EIS investment itself is free of CGT so long as the investment has been held for three years.
The schemes have Inheritance Tax advantages – EIS shares will generally qualify for 100% IHT business asset relief once they have been held for two years.