EIS offers a number of tax breaks to investors who buy shares in small, private companies and hold those shares for at least three years before sale. Our Bolton Accountants can help you decide whether the schemes will benefit your business.
The reliefs are 30% income tax relief on the investment; no capital gains tax (CGT) on profits made from; losses can be offset against income tax and the shares are exempt from inheritance tax (IHT).
SEIS is very similar to EIS, but it is designed for investing in even smaller companies and provides more generous tax breaks.
The tax breaks are the same as above but income tax relief is at 50 per cent and there is an extra capital gains tax reinvestment relief which is useful to an investor who has recently paid capital gains tax on other investments. In this situation, up to 50% of the tax paid can be reclaimed if the money is reinvested into SEIS.
Investing in small companies can be more risky than buying shares in larger established entities. However, small companies can grow very quickly, so whilst you may be more at risk of losing your money, you are also far more likely to make a significant return on your investment.
You should always check that the company you are investing in is definitely eligible for EIS or SEIS – and make sure you’re happy with it as an investment. Never invest just for the tax breaks.
If you’re looking for funding, please contact our CHW Bolton Accountants on 01204 534031 or via our enquiry form.
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