Enterprise Investment Scheme (EIS)

EIS enables you to offer major tax savings to equity investors

The Enterprise Investment Scheme has been developed to help growing companies raise finance by offering tax relief on new shares.

The benefits of EIS:

  • There is 30% income tax relief on EIS investments of up to £1 million per individual in any tax year
  • 100% Capital Gains Tax relief for investors if the shares are held for at least three years
  • The company can raise up to £5 million under EIS each year
  • Other major tax benefits are also available - see FAQs

Companies looking to raise equity funding would be well advised to use EIS as it is a major incentive for investors. The 30% tax benefit reduces the financial risk of any loss to 70% of the amount invested, if the company should fail, and even this net loss can normally be offset against other taxable income.

To use the EIS, it’s best to obtain advance assurance of eligibility for EIS from HMRC so that you can prove to investors that their investment will definitely get the tax relief.

Very much appreciated your persistence and guidance through the challenges that routinely pop up when dealing with government entities. Very pleased with the result and look forward to crossing paths sometime in the future.

Tidoforex

How we can help:

The EIS/SEIS Full Solution Package - a complete service to set your company up as EIS or SEIS eligible, including obtaining advance assurance from HMRC, advice on how to structure your scheme, and explaining how to complete the official forms after completion of your funding: £995 + vat.

Our main specialist is Jerry Davison, who has been awarded an EIS Diploma by the EIS Association.

Get in touch - call us on 01392-432654 or email office@millconsultancy.co.uk

How does an EIS work?

Investment

John makes an investment of £20,000 in a company.

Company increases in value

The value of the company that John has invested in quadruples over time. His £20,000 investment is now worth £80,000 after 3 years.

Holds on to shares

By holding on to his shares for 3 years he qualifies for exemption from capital gains tax on any investment profit.

His gain

John sells his shares after 3 years for £80,000 making a profit of £60,000. This is free of capital gains tax, and he had received £6,000 of income tax back on his £20,000 investment, so in total he has received £86,000 back on his original investment.