EIS Benefits

Income Tax Relief

A qualifying investor can claim income tax relief of 20% of his/her investment in an EIS company (on the basis of current tax rates) from his/her liability to tax for the current tax year.

This relief can be claimed in respect of the first £200,000 invested by a qualifying investor in a tax year.

Capital Gains Tax Exemption

A qualifying investor is exempt from liability to capital gains tax on the disposal of shares in an EIS company provided the shares have been held for three years and EIS income tax relief has been claimed on those shares and not withdrawn.

Capital Gains Tax Liability Deferral

A qualifying investor can defer current capital gains up to the amount invested in an EIS company even if it exceeds the £200,000 limit.

The subscription for EIS shares must be made, and the shares issued, in the period beginning 12 months before and ending 36 months after the date of the disposal for which relief is claimed.

Loss Relief

Any losses made in respect of EIS shares net of any income tax relief attributable to them are allowable and may be set off against other capital gains of a qualifying investor and it may also be possible to set off the net loss against other taxable income in the tax year of the loss or the preceding year.

Capital Gains Tax Taper Relief

Gains made on investments over the EIS £200,000 threshold will be entitled to taper relief.

Inheritance Tax Relief

Shares in an EIS company should in most cases qualify for 100% exemption from inheritance tax in the event of the death of the shareholder as long as the shares have been held for two years or more.

This relief applies without limit on the amount invested.

Dividend Policy

Dividends are taxable to income tax, but it is unlikely an EIS company will pay a dividend in the early years.

Please note that the above comments reflect Ashcourt Asset Management’s understanding of current tax legislation. This is not a comprehensive guide and no action should be taken without further consultation. Tax legislation is subject to change and no guarantees can be offered in respect of any changes which may arise in the future.

Ashcourt Asset Management is the trading name of Ashcourt Asset Management Limited

Registered in England & Wales with company number: 3691998. Registered office: 11 Tower View, Kings Hill, West Malling, Kent ME19 4UN