The Enterprise Investment Scheme or EIS for short, the father of the Seed Enterprise Investment Scheme, provides more wide-ranging tax incentives to investors to back growth companies. Investors paying the top rate of tax can claim up to 58% of their EIS investment against tax.
- Investors receive 30% tax relief in the tax year the investment is made, regardless of their marginal rate. In other words, you can write off thirty per cent of your investment against tax, whatever rate you pay tax at.
- In the 2012-13 tax year, tax payers can roll a chargeable gain on the disposal of assets in the tax year into shares qualifying for EIS income tax relief, with a full capital gains tax exemption. In other words you get up to a further 28% off your investment.
The rules state:
- EIS investors can invest Â£1,000,000 in a single tax year which can be spread over a number of companies.
- EIS qualifying companies can raise no more than Â£10,000,000 in total via EIS investment in any one year.
- Investors cannot control the company receiving their capital, nor can they have more than 30% of the equity of the company in which they invest.
- EIS companies must be UK companies and have a permanent establishment in the UK; they must have fewer than 250 employees, and,Â if the company is the parent company of a group, that figure applies to the whole group.
- EIS companies can have been trading for for any length of time; their assets must be less than Â£20,000,000; and they have to trade in an approved sector â€“ generally not in finance or investment.