The Tax Relief Benefits of Enterprise Investment Scheme (EIS)

The Enterprise Investment Scheme is a one of a kind scheme that is specifically designed for uplifting the importance of small scale enterprises. It encourages individuals to invest at high risk companies but by providing them a wide range of tax reliefs for those who buy new shares in the same company. This guide is going to focus on the basic pitfalls of the scheme and how reliefs help in avoiding them.

Basic Benefits of Enterprise Investment Scheme

When you have EIS by your side then you are facilitated with endless benefits. These benefits can be broadly classified into 

  • Income Tax Relief: The world of investment is prone to market risks; therefore their trends remain to be unpredictable. However, when you purchase the shares of those companies that are registered with EIS then you have a security relief that would cover 30% of the cost of the shares that you have lost. With this it even carries forward entire or a part of the share that you have lost to entitle you with income tax benefits.
  • Carry Back: As per the rules of EIS an investor has the option to carry-back the investments to the previous year. The only condition is that the amount investment should not exceed the limit which is stated to be £1 million
  • Reduce Tax Liability: Another important advantage of EIS is that with this you can go with the reduction of your tax liability to almost zero with the help of relief taken from EIS. This helps the taxpayer to get back their claim from any repayable source such as PAYE or bank interest.
  • Loss Relief: When the investor finds that the market value of the share is disposed then this loss can be at the offset through the income of the preceding year along with the current year instead of affecting the capital gains. 

What Makes You Eligible For EIS As An Investor?

To be eligible for EIS as an investor you should

-          Have not more 30% of interest in the company

-          Not have any relation such as spouse, prior business contacts or any other associates with interests with the company

-          Not hold any sort of preferential shares

-          Not have any controlling interest over the company and

-          Not use this scheme only for evading your income tax

Still if you are concerned about the working of EIS then go for Kuber Ventures, where you can find a complete solution to various aspects of the scheme. Visit https://www.kuberventures.co.uk/new-eis-rules-2015/ to know more about them.