Following initial planned changes to the Seed Enterprise Investment Scheme (SEIS) and Enterprise Investment Schemes (EIS) announced in the Chancellor’s budget back in March, further amendments are currently in the process of being implemented as the Finance Bill 2015-2016 makes its way through parliament. The way that Venture Capital Trusts (VCT’s) invest their money has also come under scrutiny.
The Enterprise Investment Scheme (EIS) was set up to provide tax incentives in the form of a variety of income tax and capital gains tax reliefs to investors who invest in smaller, unquoted, trading companies. The Finance Act 2012 then subsequently introduced the Seed Enterprise Investment Scheme (SEIS), a scheme like EIS but for start-ups.
Amongst several of the EIS amendments, there are a number of different limits that relate solely to knowledge-intensive companies (those companies that fulfil certain requirements relating to higher spend on R&D, meeting an innovation condition and skilled employee’s condition).
Below is a summary of these changes:
Whilst it may appear that access to EIS, SEIS and VCTs has in, some cases, become more restrictive, the overriding consensus is a more targeted approach to focusing on those companies that need the investment most.
It is also important to note that EIS, SEIS and VCTS are usually aimed at investors with significant investment portfolios or experience who can afford to take a long-term view and are comfortable with the risks of investing in smaller companies. EIS, SEIS and VCTs are therefore not suitable for all investors.
If you would like more advice on how to invest using any of these avenues, please contact your Finura Partners advisor.
Sources: http://www.investorschronicle.co.uk/2015/07/09/funds-and-etfs/vcts-and-eiss/summer-budget-vct-and-eis-changes-8E4zVeaOeUzwsCEETpJLQM/article.html, http://www.gannons.co.uk/tax-law/changes-to-eis-and-tax-relief/, http://www.rossmartin.co.uk/companies/seis-eis/560-enterprise-investment-scheme-eisand http://www.osborneclarke.com/connected-insights/blog/reserve-power-capacity-and-generation-investors-be-excluded-tax-advantaged-eis-and-vct/
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