The Enterprise Investment Scheme (EIS) is a UK government initiative designed to stimulate economic growth. It effectively supports small and new businesses through EIS for Start-ups for investors. Since its introduction in 1994, EIS has provided crucial funding to early-stage companies that struggle to attract investment due to high risks.
Firstly, EIS offers substantial EIS for Start-ups. This includes income tax relief, capital gains tax deferral, and loss relief. Consequently, these incentives make EIS an exceptionally attractive investment vehicle.
Moreover, EIS makes investments in small, unquoted companies more appealing. This, in turn, helps businesses raise the capital needed for growth and development. As a result, such support fosters innovation and job creation, significantly benefiting the broader economy.
Specifically, EIS allows businesses to raise £5 million each year, with a maximum of £12 million over the company’s lifetime. Importantly, funds must be used for growth, rather than acquisitions or other non-qualifying purposes.
On the other hand, investors can claim 30% income tax relief on investments up to £1 million per tax year, or up to £2 million for ‘knowledge-intensive’ companies. In addition, there are further benefits, such as capital gains tax exemption on profits from EIS shares held for at least three years and inheritance tax relief on shares held for at least two years.
Scenario: For instance, Jane invests £100,000 in a qualifying tech start-up. She claims £30,000 EIS for Start-ups, thereby reducing her tax bill. If, after three years, the investment grows to £300,000 and she sells her shares, the £200,000 gain is exempt from capital gains tax. Even if the investment fails, she can claim loss relief, thus mitigating her financial risk.
Apex Accountants offer expert guidance on navigating the Economic Growth through EIS landscape:
Worked Example:
Scenario: Consider GreenTech Ltd., which plans to raise £500,000 through EIS. Apex Accountants guide them through securing advance assurance, ensuring compliance, and issuing EIS3 certificates to investors.
Outcome: As a result, investors in GreenTech Ltd. successfully claim their EIS for Start-ups, supported by Apex’s expertise.
By understanding and leveraging the benefits of Investor Tax Relief, both businesses and investors can make informed decisions. This approach promotes growth and innovation while enjoying significant Tax Incentives for Investors.
Are you ready to leverage EIS for Start-ups for your business growth?
Contact Apex Accountants today. Get expert guidance on securing advance assurance and maintaining compliance. Maximise your Tax Incentives for Investors and ensure smooth Economic Growth through EIS investments with our comprehensive support. Reach out now to start your EIS journey!