Save & Invest Financial Planning

Tax Year End Tax Planning

EIS & SEIS Investment Opportunities – Higher Risk Investment Products

Higher and additional rate taxpayers are aware that their pension saving benefits are about to be seriously curtailed from the new tax year on 6 April.  In addition there is speculation that the Budget on 16th March may bring a flat rate of income tax relief for pension contributions.

The reduction of these pension saving advantages is significant for higher earners but there are of course alternative investments, which may be attractive to higher rate taxpayers wishing to invest tax efficiently.  However the tax relief in this case is given to encourage investment in higher risk ventures, albeit that some schemes are structured to minimise the risk.  Both Enterprise Investment Schemes (EIS) and Seed Enterprise Investment Schemes (SEIS) have been designed by the Government to encourage private investment into unlisted companies.

What is an EIS/SEIS?

An Enterprise Investment Scheme (EIS) aims to encourage investment in unquoted UK companies by way of providing tax reliefs to investors.  The minimum period for investment is three years in order to obtain the tax relief but investors may find themselves unable to exit or ever realise profits. Unlike Venture Capital Trusts (VCTs), EISs are notquoted on the stock exchange. 

Seed Enterprise Investment Schemes are a relatively newer vehicle with the same underlying principles as EIS but focus on early stage companies with different investor capital limits and tax reliefs from EIS.

Seed Enterprise Investment Schemes (SEIS) were introduced in the Chancellor’s 2011 Autumn Statement (6th December 2011) and are in essence a smaller version of the EIS. The main benefits to you as an investor for both EIS and SEIS are:

Potential Benefits* Enterprise Investment Scheme (EIS) Potential Benefits* Seed Investment Scheme (SEIS)
  • 30% income tax relief
  • CGT deferral
  • IHT relief after 2 years
  • Tax free gains
  • Loss relief available
  • No remittance charge for non-domiciled residents bringing funds onshore for investment via Business Investment Relief
  • 50% income tax relief
  • 50% CGT exemption
  • IHT relief after 2 years
  • Tax free gains
  • Loss relief available
  • No remittance charge for non-domiciled residents bringing funds onshore for investment via Business Investment Relief


*Potential Tax benefits will depend on individual circumstances and maybe subject to change in the future.

Risks

Tax

All statements concerning the tax treatment of products and their benefits are based on our understanding of current tax law and HM Revenue and Customs’ practice. Levels and bases of tax relief are subject to change.

Successful Track Records

Despite the risks there are experienced asset managers who specialise in structuring and managing EIS.  For example, Ingenious, whom we know well state that “investors to date have been rewarded with an average annual return of 11.5%, all delivered in a consistent and timely manner.”

If you are interested in this type of investment please contact me and I can tell you more about the different schemes from the well established groups we use.

Investment deadlines for several of the currently available EIS & SEIS investment products are earlier than normal this year with applications closing between 24tih and 31st March 2016.  If you or someone you know are interested in these types of investment opportunities, or require further information please do not hesitate to contact Save & Invest on 0141 332 8088.

Please note the information above is for informational purposes only and does not substitute the need for specifically tailored Individual Financial Planning advice.

How can we help you?

Freephone 0800 132 740
info@saveandinvest.co.uk Contact us