Tax-Efficient Investments

Tax-Efficient Investments

We are specialists in applying for and administrating the Enterprise Investments Scheme (EIS) and the Seed Enterprise Investment Scheme (SEIS). Both these schemes offer significant tax breaks for investors and are useful tools for companies to raise funds.

Tax Relief for Start-ups

The government recognises that starting a new company can be a risky venture and so have introduced various tax reliefs for shareholders and investors:

• Entrepreneurs’ Relief (ER)

If the qualifying conditions are met capital gains tax (CGT) is payable at 10%. Up to £10 million of lifetime gains can qualify for ER.

• Enterprise Investment Relief (EIS)

Investors that subscribe for shares in cash can obtain income tax relief at 30% of the investment provided the qualifying conditions are met. There is no CGT on disposal and other gains can be deferred by investing into EIS shares. Income tax relief is also available on losses made on EIS shares.

• Seed Enterprise Investment Relief (SEIS)

Similar to EIS but for newer, smaller companies. Income tax relief at 50%. CGT reinvestment relief exempts part of other capital gains rather than defers.

Please see Tax Relief for Investors table for more information on the above.

• Venture Capital Trusts (VCTs)

A VCT is a tax efficient UK closed-end collective investment scheme designed to provide private equity capital for small expanding companies. VCT investors can benefit from 30% income tax relief up to £200k, tax-free dividends and exemption from CGT.

• Social Investment Tax Relief

This provides a range of income and capital gains tax reliefs which can be claimed by individual investors for investments they have made in social enterprises, with a view to helping people and communities. It is in place for investments made or capital gains arising in the period from 6 April 2014 to 5 April 2019.

If you require further information or assistance or would like to discuss your requirements please contact Dafydd Ford.