Frequently asked questions

Below are some of the most frequently asked questions relating to EIS.
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  • It is strongly recommended that independent financial advice is sought prior to investing, in order to ensure suitability.
  • Understand the potential investment risk and the steps the investment team takes to mitigate these.
  • Understand the tax risk and understand how underlying investments comply with the qualification criteria of EIS and the wider spirit of EIS.

  • Consider the experience and approach of the management team. Consider whether the investment team has experience of managing and mentoring growing businesses.
  • Understand the fees payable and identify whether the investment provider is charging fees to both the investor and investee companies.

  • An EIS investment is likely to be illiquid and you may not be able to access your cash for a minimum of three years and often for considerably longer.
  • Understand how quickly the investment provider expects to deploy your invested funds into investee companies. It is only once funds have been deployed and shares have been allotted that the process of claiming tax reliefs may start. The three-year minimum holding period also starts at this point. Therefore, it is imperative to understand when funds are to be deployed as this will impact on the time taken to claim tax reliefs, and ultimately will impact on any potential exit timescale for investors from the Fund.

If the investor has had the qualifying shares for two years and still owns them at the time of their death, the EIS investment is eligible for 100% inheritance tax relief. If the investor has used an EIS investment to defer the tax on any capital gains, this tax liability dies with them.

In order for investors to claim their tax reliefs, they must be in receipt of an EIS3 certificate in respect of each investee company in to which they are invested. Deepbridge has found that EIS3 certificates usually take around 16 weeks to produce although this can take longer, from deployment of funds.

Investing via EIS should be considered throughout the year. Historically many investors have waited until the end of the tax year to invest. However, this wait may lead to the investor missing opportunities to claim tax reliefs earlier. Waiting to the end of the tax year may reduce the quality of opportunities on offer. If there is a rush of investment prior to the end of tax year, it has been known for some EIS providers to struggle to deploy funds or accept inferior quality investee companies in order to deploy funds in time.

EIS vs VCT

A comprehensive guide explaining the differences between a Enterprise Investment Scheme & Venture Capital Trusts.

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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.

1. EIS Basis Modern World of EIS
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

2. EIS Basics Trigger Points
EPISODE 2

Trigger Points

Investigating the types of clients where EIS is most suitable.

 45 mins

3. EIS Basics Due Diligence Research_01
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.

Academy Advanced Episode 1
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

Academy Advanced Episode 2
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

Academy Advanced Episode 3
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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