Who is EIS suitable for?

There are many situations where an EIS investment is suitable, so we’ve selected some popular scenarios for professional advisers to digest and share with clients.

Income Earners

Paula is a 55-year-old executive and is expected to earn £100,000 in the current tax year, giving her a scheduled income tax liability of circa £27,500. She has a net worth that she feels can support an investment regarded as higher risk.

Growth Seekers

Ella is a high-net-worth investor and invests approximately £400,000 into an Enterprise Investment Scheme (EIS) annually. She has maximised her annual pension and ISA allowances and requires an alternative tax-efficient solution for her long-term savings. She likes the idea of supporting UK growth-focused companies.

Future Planners

Tom is looking forward to his retirement and is making plans with his wife. He’s recently sold the last properties in his portfolio, producing a significant CGT bill. Whilst he will enjoy a comfortable retirement, he would also like the opportunity to grow his wealth over the next 10-15 years.

Diversifiers

Some clients want to invest in an EIS as venture capital provides diversification against their other market-listed investments. Read the below independent report by Hardman & Co., which investigates this.

Inheritance Tax Problems

Kenneth is a 70-year-old retired successful businessman concerned about the potentially significant Inheritance Tax (IHT) liability against his estate. The value of his estate falls over the combined tax-free thresholds accessible by him and his spouse.

Capital Gains Bill Payers

Chris is a 45-year-old landlord who has recently sold three properties, making a gain of £1m in the 2022/23 tax year. He’s already paid his capital gains tax (CGT) bill of £280,000* (based on a 28% higher CGT rate on residential property)

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