Tax Time with AWM: EIS

Tax-Year-End is approaching and its time to take full advantage of all those tax benefits, that not many people seem to know about.

This is Tip #2 of the blog series with the main topic of Pre-Tax-Year-End tax planning. If you missed Tip #1 on Venture Capital Trusts, head over to the AWM blog.

These tips are to help make sure that you best utilise your Tax-Year-End options and today we focus on Enterprise Investment Schemes (EIS).

What is EIS?

Introduced in 1994, the Enterprise Investment Scheme (EIS) is a UK government scheme designed to encourage investment in small or medium sized companies. They do this by offering tax reliefs to individual investors who buy new shares in these smaller companies.

An individual can invest anything up to £1 million (or £2 million given at least £1 million is invested in Knowledge-intensive businesses) per tax year for tax relief.

To access an EIS an investor needs to invest in the shares of a small, unlisted company. Small means 250 employees or less, and maximum gross assets of £15 million (before the investment). Unlisted means that the company is not listed on a major stock market.

Investing in small companies is generally riskier than buying shares in large companies. However, small companies can grow very quickly.

The Different Types

There are two approaches an investor can access EIS investment:

1. Direct/Single EIS Company
An investor can invest directly in EIS qualifying companies and can choose which companies to invest in. These types of opportunities are more suitable for sophisticated investors who have good knowledge and expertise to assess and understand the companies they invest in.

2.EIS Fund/Portfolio
Most of the offers in the EIS space are in the form of an EIS fund or portfolio service provided by EIS investment managers who have the expertise to source and assess deals and build a portfolio of multiple EIS companies for clients on a discretionary basis. Through investing in an EIS fund or portfolio, you can benefit from the fund manager’s experience and expertise of deal picking and at the same time achieve a level of diversification within the portfolio.

AWM's Recommendations

AWM has a dedicated investment team researching investment offers in the whole of market. We have a rigorous selection process in place, aiming to find the best EIS offers in the market for our clients. If you would like to hear more about your options please contact us by clicking below.

Important Facts

It’s important to note that Enterprise Investment Schemes are not a viable option for everyone. We cannot guarantee the investment will take place to accommodate the 2019/2020 Tax-Year-End.

Ascot Wealth Management will only recommend individuals to invest in EIS qualifying companies after undertaking enhanced due diligence on the individual and ensuring they are suitable for the recommendation, this includes a High Net Worth Suitability Assessment. The general risks associated with EIS investment has been listed below which will apply for all EIS. There would also be deal-specific/sector-specific risks in EIS offers that need to be further considered at the specific EIS fund level or on a deal by deal basis.

Please click below to find out more about the potential risks of EIS or chat with one of our advisers to find out what the most viable option is for your personal situation.

*utilising these allowances are provider timeline dependent.