Enterprise Investment Scheme_The benefits and qualifying requirements_2022

Enterprise Investment Scheme_The benefits and qualifying

Guidance note Enterprise Investment Scheme This guidance note provides an overview of the benefits and qualifying requirements of the Enterprise Investment Scheme. What is the Enterprise Investment Scheme? The Enterprise Investment Scheme (EIS) has been in existence since 1994. It is intended to promote investment in small and medium sized companies with a higher risk profile. The EIS has evolved continually since its inception. Recent years have seen a significant increase in the thresholds to qualify for EIS. Why should I be interested in EIS? The tax reliefs available under the scheme are very generous. • Income tax relief – income tax relief is available at 30% of the amount of the qualifying EIS investment provided the shares are held for three years. • CGT deferral – capital gains realised on the disposal of other assets can be deferred by reinvesting the proceeds of the disposal in qualifying EIS investments. • CGT exemption – gains on qualifying EIS investments are exempt from capital gains tax providing the shares are held for three years. • IHT – qualifying EIS investments may also qualify for 100% business property relief once held for two years. • Loss relief – losses on qualifying EIS investments (less any EIS income tax relief already received) can be set-off against income to reduce income tax, or gains to reduce capital gains tax. Does the investment qualify for EIS relief? There are a number of requirements relating to the company, the investor and the shares which must be met. For a summary of certain of these requirements please see overleaf. What next Take advice to ensure that the investment will qualify for EIS relief. The rules surrounding eligibility for EIS relief are complex and require tailored advice. There are several ways in which an investment can fail to meet the criteria or relief can be withdrawn following investment. Burges Salmon has expertise in corporate, tax and funds EIS advice. We are able to advise across the EIS approval process, as well as on more specific investor or issuing company issues and concerns. Further information If you would like any further information on EIS please speak to your usual contact at Burges Salmon or: Who to contact Emma Heelis-Adams Partner M +44 (0) 7814 166 091 T +44 (0) 117 307 6957 E emma.heelis-adams @burges-salmon.com Who to contact Rebecca Arthur Solicitor M +44 (0) 7812 317 992 T +44 (0) 117 307 6318 E rebecca.arthur@burges-salmon.com >