EIS is designed to help these small companies raise finance by offering a range of tax reliefs to investors who purchase new shares in those companies while the VCT scheme spreads the investment risk over a number of companies since individuals invest indirectly in a range of small companies. Investors subscribe for shares in VCTs, which are companies listed on the London Stock Exchange and are similar to investment trusts. VCTs are run by fund managers who are usually members of larger investment groups. From time to time, VCTs realise investments and make new ones. Individuals may now subscribe for shares in a VCT via a nominee.
Charter & May can provide you with excellent, client centric advice regarding the effective use of these government schemes. Below is an overview of the EIS which C&M have dedicated professionals to guide you through five current tax reliefs available in companies qualifying under the EIS.
30% income tax relief on the amount invested provided that the shares are held for a minimum of three years. The maximum amount on which investors may obtain income tax relief can be withdrawn if the investor becomes a ‘Connected Person’ or the company ceases to be qualifying within three years of the share issues.
CGT exemption on capital gains realised on the disposal of an EIS investment, provided that the shares have been held for at least three years.
Unlimited capital gains tax (CGT) deferral providing the investment is made in the period beginning 12 months before and ending 3 years after the date of the disposal subject to CGT.
Inheritance Tax (IHT) exemption providing the shares have been held at least two years from the date of issue and are held at the time of death.
Losses on the disposal of shares can be offset against either taxable income or chargeable gains on other assets.