What is EIS?

Launched in 1994, The Enterprise Investment Scheme is a government scheme that provides a range of tax reliefs for investors who subscribe for shares in qualifying companies. There are currently five tax reliefs available to investors in companies qualifying under the EIS:

30% upfront Income Tax relief

30% income tax relief on the amount invested provided that the shares are held for a minimum of three years. The maximum amount on which investors may obtain income tax relief in any tax year is £1million. Income tax relief can be withdrawn if the investor becomes a ‘Connected Person’ or the company ceases to be qualifying within three years of the share issue.

Gains CGT exempt

CGT exemption on capital gains realised on the disposal of an EIS investment, provided that the shares have been held for at least three years.

Uncapped CGT deferral relief

Unlimited capital gains tax (CGT) deferral providing the investment is made in the period beginning 12 months before and ending 3 years after the date of the disposal subject to CGT.

Inheritance Tax exempt

Inheritance Tax (IHT) exemption providing the shares have been held for at least two years from the date of issue and are held at the time of death.

Up to 45% loss relief available

Losses on the disposal of EIS shares can be offset against either taxable income or chargeable gains on other assets. But first the income tax relief you have received on your investment must be deducted from the losses. These losses can then be set against income for the tax year in which they arise or the preceding tax year.

What are the benefits of investing in EIS?

Growth

A healthy and dynamic base of SMEs is crucial to a modern, fully functioning and balanced economy. SMEs have an important role to play in driving growth, opening new markets and creating jobs. Moreover, these SME companies continue to struggle to access the finance they require to fund the continued growth of their business from traditional sources. This in turn increases the volume and quality of investment opportunities that we see, enabling us to ensure that the very best companies with the strongest management teams and strongest growth potential receive investment for the Seneca EIS portfolio.

Diversification

The SME market follows a different investment cycle from other parts of the market, creating further diversification for an investment portfolio. This diversification will work to offset the risk of early stage investing – explained further HERE

Presence

Seneca is located in the UK’s SME heartlands; Manchester, Liverpool, Leeds and Birmingham. Combined with our extensive professional networks our EIS investment deal flow remains buoyant.

A useful alternative

With a reduction in pensions allowances and ongoing volatility in world stock markets, EIS is becoming an increasingly prominent asset class of its own.

The attractions of investing in smaller cap companies when allied to the generous tax reliefs on offer have seen EIS as a growing component in many investors’ portfolios.

 


Warning

This website makes reference to the previous rounds of investments made by Seneca Partners on behalf of certain investors within the Seneca EIS Portfolio Service. The rationale for the investment may no longer be valid. Under no circumstances should you take this information as a recommendation by Seneca Partners for you to invest in the Service or in any of the companies listed above.

Get in touch

For administrative and shareholder queries, please contact the Seneca EIS Team

For sales or other general queries, please contact the Seneca EIS Team or LGBR Capital