UK EIS Investments

The Enterprise Investment Scheme (EIS) has been designed by the UK Government to encourage private investment into small, high risk trading companies by offering a range of tax incentives.

Providing the underlying investments made by the EIS are held for at least three years (for Income Tax relief and tax free growth), the current tax reliefs available for UK investors are:

30% upfront Income Tax relief up to maximum investment of £1 million, which can be carried back to the previous tax year

100% Inheritance Tax relief (provided the investments have been held for at least 2 years at time of death)

Capital gains tax deferral for the life of the investment

Tax-free growth

Tax relief from investment losses

If you are looking to invest across a range of EIS managers and would like a simple way of administering your investments, the scheme has been designed with you in mind.

EIS may be right for you if any of the following statements apply:

· You have significant savings and want to diversify your investments while benefiting from the tax incentives

· You are keen to benefit from the growth potential offered by investment in smaller companies

· You would like to reduce the potential Inheritance Tax due on your estate

· You would like to reduce your Income Tax liability

· You want to defer a capital gain

· You have a significant pension fund but are now exposed to the Annual Pension and/or Lifetime Allowance

· You have elected for Pension Enhanced Protection or Fixed Protection

· You want a tax efficient savings vehicle without the restrictions attached to pensions

· You are a UK resident non domicile and would like to remit overseas income and capital gains tax free

We believe that EIS/SEIS portfolios are the investment of choice if you want to make larger contributions to fund your retirement in a tax efficient manner.

However, the tax benefits of investing should be your secondary and not primary reason for investing. EIS (and SEIS) is designed to provide an excellent investment opportunity in its own right.

Direct Application:

Investors can choose to invest via an offer to purchase new shares directly into an EIS qualifying company. The biggest benefit of this option is that the investor has direct control over the investment. However, not many people have the skills needed to carry out the necessary due diligence needed and the lack of thorough due diligence carries exceptionally high risk.

Investors who are seeking a more diverse portfolio may find this investment option a little less attractive as “all their eggs will be in one basket”. Additionally, the same benefit (more control) can also be a drawback as investors will not have the benefits of working with professional advisers.

A discretionary service:

This option allows investors to invest their EIS/SEIS money through a discretionary manager. For most investors the attractive aspect of this option is access to professional advice and information via trained and qualified personnel and recommended by a financial adviser. An adviser will likely simplify the investment process by handling special paperwork and dealing with other details.

However, as with a direct investment, the client is likely to be invested in a small number of companies and very exposed to the fluctuation in valuation

A platform:

You can use a platform offering EIS/SEIS solutions for EIS/SEIS investors, helping to simplify the EIS investment process. From those looking at longer term investment (perhaps for those considering inheritance tax (IHT)) to those looking for more “asset focused” investments, to those considering Seed EIS investment.

With the availability of a wide range of managers, clients and advisers can significantly reduce risk with greater diversification all within one application form.