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What is the Enterprise Investment Scheme?
Because of the additional risks of investing in smaller companies compared to larger ones, an EIS investment comes with a number of valuable tax benefits. These include relief from income tax, inheritance tax and capital gains tax. In addition, any losses can be offset against earnings and capital gains, which is known as ‘loss relief’.
Benefits of investing in an EIS
- Access to investments in early-stage companies
- Up to 30% income tax relief on investments up to £2,000,000 per tax year, provided investment is held for a minimum of three years
- Potential for 100% relief on inheritance tax (available after holding investment for two years and provided shares are still held at time of death)
- Opportunity to defer a capital gain and eliminate it entirely if EIS shares are held at death