Additional EIS Tax Relief(s)
The following tax reliefs are available only through an EIS investment:
The Carry back facility
EIS is the only tax-efficient scheme that offers investors retrospective tax relief. One key example of this is with the income tax carry back facility, allowing investors to claim back income tax paid not only in the current tax year but also the previous one. Tax relief can be split across the two years in any balance or claimed solely in either year. With EIS, up to 30% of the amount invested can be claimed, and with Seed EIS, up to 50% can be claimed. For advisers, this type of tax planning is particularly pertinent at tax-year end, after their client(s) have submitted their previous year’s tax return on January 31, they then often have a short window to get cash deployed before tax-year end in order to offset income tax against the previous tax year.
Capital Gains Deferral
EIS investors can also use the scheme to defer CGT liabilities for gains achieved within the previous three years or the upcoming 12 months. This can be particularly powerful across a portfolio of EIS assets with CGT potentially being written off via annual allowances as the EIS portfolio achieves exits over several tax years.
Inheritance Tax Relief
EIS investors can benefit from 100% inheritance tax exemption through the availability of business relief, after an EIS-qualifying investment has been held for at least two years.
Share Loss Relief
As EIS investors own direct shares in businesses, HMRC acknowledges that the risk of companies failing largely sits with the investor. As a consideration of this, HMRC allow EIS investors to claim share loss relief if the value of EIS shares drop to zero, or if the shares are sold for less than the original amount invested. This is the case even if an investor holds a portfolio of EIS companies that, overall, has delivered a positive return. Loss relief can be claimed against either their income tax or capital gains tax bill. In conjunction with any income tax relief claimed, this could provide total tax relief of up to 61.5% for a 45% taxpayer.
Why not subscribe to watch the Educational Videos?
To accompany the online learning material we have also included a series of 4 videos to help explain EIS. Each video is 45 minutes long. To access video content you will need to register. Based on attendee feedback, this series is classed as a world leading event according to Net Promoter Scores.
EIS: The Basics – On Demand
Our industry leading educational programme covers the basics on what you need to know to recommend an EIS.
If you’ve never recommended an EIS before, we suggest you start with episode 1.
Click the image below to sign up and access the video instantly, free of charge.
EPISODE 1
The Modern World of EIS
An exploration into why EIS is more popular than ever, how early-stage companies are performing in the modern day climate and covering the basics of the tax reliefs.
45 mins
EPISODE 2
Trigger Points
Investigating the types of clients where EIS is most suitable.
45 mins
EPISODE 3
Due Diligence & Research
Understanding the due diligence required by advisers who are recommending EIS to clients.
45 mins
EIS: Advanced – On Demand
This is recommended for advisers who have completed the EIS—The Basics course, who already recommend EIS, or who are confident in tax-efficient investments.
Click the image below to sign up and access the video instantly, free of charge.
EPISODE 1
Journey of an Investee Company
Investigating the journey of companies as they grow to the point of exit, and understanding how returns are achieved through an EIS investment.
45 mins
EPISODE 2
More than just a tax tool
By analysing findings established in the Hardman & Co report, we discuss how you can add Venture Capital to a clients portfolio without impacting overall risk levels.
45 minutes
EPISODE 3
Financial Planning Considerations
Understanding the due diligence associated with recommending an EIS, and a closer look at tax planning scenarios.
45 minutes
IMPORTANT: The views expressed in these webinars are the views of the individual and not necessarily of Deepbridge Capital LLP. Figures quoted by the presenter and/or guest may be approximations. The content of these videos should not be construed as financial advice. This video is a real-time financial promotion and, as a result, has not been approved as a financial promotion for the purposes of Section 21 of the Financial Services and Markets Act 2000.
RISK WARNING: Any decision to invest should be made only on the basis of the relevant documentation for the investment available in the accompanying company profile. Investments in unquoted companies carry high risks. Capital invested will be at risk and you could lose all of your investment. No established market exists for the trading of shares in private companies, making it difficult to sell shares.
Tax treatment depends on the individual circumstances of each investor and may be subject to change in future. The availability of tax reliefs depends on the Company invested in maintaining its qualifying status. Past performance is not a reliable indicator of future performance.
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