EIS, VCT, SEIS, REITS

Question 1

Name 4 qualification criteria for a REITS?

Answer 1

1. No single property can exceed 40% of the market value of the total portfolio
2. At least 75% of total gross profits must come from the ring fenced part
3. At least 90% of profits must be distributed to shareholders within 1 year of the end of the accounting period
4. 125% of interest on borrowing must be covered by rental profits

Question 2

How is a REITS taxed?

Answer 2

The ring fenced part is Interest paid net, no corporation tax but subject to CGT.
The non-ring fenced element pays dividends gross but is subject to corporation tax and is also subject to CGT

Question 3

Name six qualification criteria for an EIS?

Answer 3

1. Maximum funds raised through EIS funding £5 million
2. Fewer than 250 Employees
3. Must be unlisted company and have no plans to become listed
4. Must carry out a UK trade but not necessarily based in UK
5. Gross assets of no more than £15 million
6. Has to have been carrying out a QUALIFYING trade for at least 3 years

Question 4

Name four qualification criteria for a SEIS

Answer 4

1. Less than £150,000 funding raised through SEIS in total not just the last year
2. Less than 25 Employees
3. Gross assets of not more than £200,000 immediately BEFORE the issue
4. Company must exist for it to carry on a new trade

Question 5

Identify 3 further facts about REITS

Answer 5

1. Is an investment Trust
2. Must be UK resident
3. Must operate as a closed ended company on a listed stock exchange

Question 6

Name 10 qualification criteria for a VCT?

Answer 6

1. Must distribute at least 85% of its income
2. Must be listed on a stock exchange
3. 10% of holdings within any one company must be ordinary shares (not preference)
4. 15% maximum investment in any one company by a VCT
5. 30% of it’s investments in value must be in new ordinary shares
6. 70% of its investment must be in qualifying unlisted shares (including AIM)
7. All of the money raised by a VCT must be issued within two years
8. Investee company must have less than 250 employees at the time of share issue or 500 for Knowledge intensive companies
9. Must limit its investment to qualifying companies that have been running for 7 years since first commercial sale or 10 years for Knowledge intensive.
10. Individual companies may receive no more than more than £12 million total raised through EIS or VCT funding (£20 mill for KI co’s)