Claiming Tax Relief for Enterprise Investment Scheme

 What Is the Enterprise Investment Scheme?

Enterprise Investment Scheme (EIS) is designed to raise capital for smaller, riskier companies in the United Kingdom. This investment program helps enterprises for growing faster as it offers tax relief to the investors who buy new shares in the company. It encourages new investment in higher-risk trading companies. 

How does your company qualify as an EIS company?

Both the companies and their investors fulfil the below requirements to qualify for EIS tax relief: 

• The company must have a UK permanent establishment and be unquoted;
  
  
• Before the investment company's gross assets must not exceed £15 and £16 million after the investment;
  
  
• For the knowledge-intensive company, the number of full-time employees must not exceed 500 or 250 for other;
  
  
• The company must be aiming for development and growth in the long term;
  
  
• There must be a substantial danger to the investor that there will be a loss of funds over the amount of net investment return;
  
  
• The company must only have qualifying companies:
  
  
• The company must not be under the authority of another group; 
  
  
• The company must not be in an economic problem;

A company can raise a maximum of £5 million through the EIS scheme and £10 million for Knowledge Intensive Company.  

Taxpayers must obtain Form EIS3 from the company to claim tax benefits. The investor loses their tax relief claim if the company loses its qualifying status despite having no control over the company’s decisions.

What is a Knowledge Intensive Company?

Knowledge Intensive Companies are firms that are carrying out R & D, or innovation at the time of issuing shares. They have a particular status under EIS, and can raise more EIS investment, more flexibly, than non-KIC companies.

What is the inheritance tax position in relation with the EIS shares?

Once a two year ownership term has been satisfied, shares will attract Business Property Relief at the pace of 100% and thus escape inheritance tax. 

We can provide you complete assistance with the correct advice at the right time to make sure that an investment is appropriately structured to attract EIS relief.

Our tax accountant in UK review your company and the nature of your trade and apply for advance EIS assurance that the firm is a qualifying company running a qualifying trade.