EIS, VCT and SEIS

Question 1

Requirements for a Venture Capital Trust (VCT)?

Answer 1

70% of investment value in qualifying unlisted trading companies

No more than 15% in any one company + 30% of fund in ordinary shares

No more than £5,000,000 in one company.

Question 2

Requirements for Enterprise Investment Schemes (EIS)?

Answer 2

Gross assets of less than £15,000,000 + Fewer than 250 full time employees + Unquoted

For 3 years after be Independent, Genuine Trade and based in UK.

Question 3

Requirements for Seed Enterprise Investment Schemes (SEIS)?

Answer 3

Company must have been trading for less than two years

Gross assets of less than £200,000 + Fewer than 25 full time employees

Must be unquoted at time of share issue

Question 4

What is a Enterprise Investment Scheme (EIS)?

(Reduce - Max - CGT Treatment + Holdover)

Answer 4

30% Tax Reducer - 1,000,000 Limit - CGT Free after 3 years - CGT deferral

Dividends taxed - Loss relief to income tax - Business Relief (IHT 0% if held 2 years+)

Clawback up to 3 years

Question 5

What is a Seed Enterprise Investment Scheme (EIS)?

(Reduce - Max - CGT Treatment + Holdover)

Answer 5

50% Tax Reducer - 100,000 Limit - CGT Free after 3 years - CGT deferral (50% Only)

Dividends taxed - Loss relief to income tax - Business Relief (IHT 0% if held 2 years+)

Clawback up to 3 years

Question 6

What is a Venture Capital Trust (VCT)?

(Reduce - Max - CGT Treatment - Hold Requirement)

Answer 6

30% Tax Reducer - 200,000 Limit - CGT Free immediately - No deferral

No Dividend Tax - No loss relief - No Business Relief

Clawback up to 5 years

Question 7

How is a EIS and SEIS Loss Relief Calculated?

Answer 7

If you sell a EIS or SEIS during the Clawback period you lose the tax relief against the amount NOT sold.

For example £60,000 EIS. Sold 1 year later but now valued at £35,000.

(60,000 - 35,000) = 25,000 x 30% = 7,500 of tax relief that is NOT withdrawn
(60,000 - 7,500) = 52,500 - 35,000 = 17,250 Loss Relief.