Investors can claim tax relief on up to £1 million worth of investments per year, and £2 million worth of investments per year if half of this is invested in knowledge-intensive companies. EIS-eligible investments can also be applied to the previous tax year.
Investment can be received under EIS only if it is within 7 years of your company’s first commercial scale.
Companies which partake in the scheme can raise up to £5 million each year, and £12 million in the company’s lifetime. This includes from other Venture Capital Trusts, Seed Enterprise Investment Schemes, Social Investment Tax Relief and state aid.
You will be able to claim up to 30% of the value of your investment. For example, if you make an investment of £20,000, you will be able to save £6,000 in income tax.
There are 2 types of CGT reliefs claimable with the EIS scheme:
Disposal relief: if an investor sells their shares after 3 years, they will be exempt from CGT on investment gains.
Deferral relief: if an investor disposes of an asset and uses the gain to invest in shares in a company that qualifies for EIS, they will not have to pay CGT until the EIS share has been disposed of.
If the company fails, the investor may claim loss relief. The amount of loss relief you can claim is equivalent to the rate of income tax you pay. For example. if you pay a rate of 45% of income tax, you will be able to claim up to 45% of your net loss in income tax relief.
The above are general conditions relating to the Enterprise Investment Scheme and each company should be reviewed on a case by case basis.