Enterprise Investment Schemes (EISs)
EISs were devised to give tax relief to people who invested in shares of qualifying smaller companies, in order to encourage investments in this area.
EISs can offer you tax advantages, but you should bear in mind that:
- Smaller companies tend to have higher failure rates than more established companies
- The value of your investment can reduce to below that which you invest and you could in extreme circumstances lose all that you invest
- The EIS must invest in accordance with strict rules and failure to adhere to this could negate tax benefits either already received or due
- EIS schemes are illiquid and there are very restricted ways to realise investments
- Changes in legislation may adversely affect the value of investments
- Strict tax rules govern the investment content of EISs
- Dividends are not tax-free
- Tax rates will depend on your individual circumstances and rates may change in the future.
The tax benefits of EISs
If you hold EISs for three years, you can benefit from:
- 30% income tax relief for tax relief claims from 2011/12 tax year. The maximum investment in any tax year that qualifies for relief is currently £500,000, meaning that the maximum income tax relief available is £150,000. This can only be taken to the extent that you have an income tax liability to offset it against, once relief for VCTs and life assurance policies have been accounted for
- Tax-free gains on the disposal of qualifying EIS shares
- Capital gains tax deferral. You can postpone paying capital gains tax on disposal of another asset if you make the EIS subscription within one year before or three years after the date of a disposal which gave rise to the gain
- Income tax relief carry-back: full carry-back facility to previous tax year on investment amounts of up to £500,000
- Relief against income or capital gains tax for shares sold at a loss.
EISs are also eligible for Business Property Relief, and therefore exempt from inheritance tax, after being held for 2 years.
Barclays can help you determine how you could benefit from investing in EISs and, if appropriate, incorporate EISs into your overall investment and retirement portfolio.
Legal information
The products and services described on this page are provided by the following company, which is part of Barclays: Barclays Bank PLC in England & Wales. For further information on these companies and Barclays please read the Important Information. Each Barclays company reserves the right to make a final determination on whether or not you are eligible for any particular product or service. Tax treatment depends on your individual circumstances and may be subject to change in the future.
You have sole responsibility for the management of your tax and legal affairs including making any applicable filings and payments and complying with any applicable laws and regulations. We have not and will not provide you with tax or legal advice and recommend that you obtain your own independent tax and legal advice tailored to your individual circumstances.
