Budget 2011: Enterprise Investment Schemes (EIS)

Budget 2011: Enterprise Investment Schemes (EIS)

Entrepreneurs and investors in AIM and PLUS listed companies are to potentially benefit from the 2011 Budget.

From 6 April 2011, the rate of income tax relief available under EIS will rise from 20% to 30%. 

Furthermore, from 6 April 2012, the maximum amount an individual can invest in an EIS each tax year will double from £500,000 to £1m. 

As long as the shares are kept for at least three years, there’s no capital gains tax (CGT) to pay when they are sold. Additionally, if the shares are sold at a loss (after taking the income tax relief into account), the loss can be set against any other capital gains or income, either in the current or previous year.

The EIS is designed to help smaller higher-risk (but potentially high-gain) companies to raise finance by offering income and capital gains tax relief to investors who purchase new shares in those companies - including those listed on the AIM or PLUS markets.

Justin Randall, Corporate Finance Specialist at Jeffreys Henry LLP comments: “Whilst the top rate of tax remains at 50%, and the annual pension allowance reduced to just £50,000 (subject to carry forward rules), investors will increasingly look for better returns making the Enterprise Investment Schemes more attractive.”

Jeffreys Henry LLP is a leading firm of Chartered Accountants in London specialising in the AIM and PLUS Markets. For further information, email enquiries@jeffreyshenry.com.

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