EIS

Question 1

What does EIS stand for?

Answer 1

Enterprise Investment Scheme

Question 2

What does an EIS invest in?

Answer 2

Direct investment in small companies for an equitable stake in the company

Investments in Unquoted trading companies including AIM

Purpose is to help business grow

Question 3

What is the tax treatment of an EIS dividend?

Answer 3

Liable to income tax

Question 4

How much income tax relief do you get investing in a EIS?

Answer 4

30% on up to a maximum investment amount of £1million (£2m if knowledge intensive)

Question 5

How is income tax relief claimed when investing in an EIS?

Answer 5

Tax relief immediately as a Tax reducer

Must be a tax liability to reduce

You can also carry back to previous year

Question 6

Is CGT payable on gains on an EIS?

Answer 6

There is no CGT payable as long as EIS has been held for 3 years

Losses can be registered subject to a reduction for income tax relief

Question 7

To get income tax relief on an EIS how long must you hold the EIS?

Answer 7

3 years

Income tax relief is withdrawn If shares are disposed of within 3 years

Question 8

CGT - Do you get reinvestment relief on an EIS?

Answer 8

Yes

Reinvestment relief is available to defer gains made on other assets where the funds are invested into EIS

Question 9

Is an EIS free from IHT?

Answer 9

Yes - 100% business relief after 2 years so no IHT