Enterprise Investment Scheme

E.I.S. - Enterprise Investment Scheme

Private investors can obtain income tax relief on their investment in certain companies under the provisions of the EIS legislation.

For latest information regarding EIS, visit:

HMR & C

Summary of The Enterprise Investment Scheme

Set out below is a summary of the main provisions of the Enterprise Investment Scheme, so far as is relevant to the Company and Investors, as set out in the 1994 Finance Act.  It does not set out the provisions in full and intending investors are strongly advised to seek independent professional advice.

EIS Tax Relief – The income tax relief, the capital gains tax relief and the loss relief together comprise tax relief under the EIS legislation. EIS relief can only be claimed by a qualifying individual who subscribes for eligible shares issued by a qualifying company on or after 1^st January 1994.

Income Tax Relief – Qualifying individuals can credit an amount equal to tax at the lower rate on the amounts subscribed in qualifying companies against their total liability to income tax for the tax year in which those shares are issued.  The relief is obtained at a rate of 20 per cent.

It does not matter where the individual is resident for tax purposes but relief is only available against United Kingdom taxable income.  The amount of income tax relief cannot exceed an individual's income tax liability and is granted before other reliefs given by way of discharge of tax.

Capital Gains Tax – To the extent that EIS income tax relief is given and is not withdrawn any gain accruing to an individual on the first disposal three or more years after the issue of those shares is not chargeable to capital gains tax.

Loss Relief – Where a loss is incurred by an investor on the first disposal of his, or her, shares, the net loss (after EIS income tax relief) may be set against either chargeable gains or taxable income at the election of the investor and at the then applicable marginal tax rate.

Top