{"id":4652,"date":"2022-04-13T14:57:05","date_gmt":"2022-04-13T14:57:05","guid":{"rendered":"https:\/\/www.bainesjewitt.co.uk\/blog\/?p=4652"},"modified":"2022-04-13T14:57:11","modified_gmt":"2022-04-13T14:57:11","slug":"generous-tax-incentives-for-investing-in-higher-risk-enterprises","status":"publish","type":"post","link":"https:\/\/www.bainesjewitt.co.uk\/blog\/generous-tax-incentives-for-investing-in-higher-risk-enterprises\/","title":{"rendered":"Generous tax incentives for investing in higher risk enterprises"},"content":{"rendered":"

With the cost of living rising steeply and taxation at its highest level for decades, tax breaks are welcome, particularly for those looking to invest their money in business.<\/p>\n

<\/p>\n

The Enterprise Investment Scheme (EIS) allows a company to raise money from investors to help grow its business. The EIS stipulates that those receiving investment under the scheme must use it to grow their business.<\/p>\n

It was designed to encourage individual investors to buy shares in higher-risk companies by offering generous tax reliefs to those who invest.<\/p>\n

Higher returns potential<\/strong><\/p>\n

Investing in less established businesses may carry greater risk, but there is the potential for higher returns and the tax relief available can minimise any loss should the worst happen.<\/p>\n

Under\u00a0EIS, a business can raise up to \u00a35 million each year, and a maximum of \u00a312 million in the company\u2019s lifetime.<\/p>\n

There are\u00a0different rules for knowledge-intensive companies<\/a>\u00a0that carry out a significant amount of research, development or innovation.\u00a0 It is a complicated area, so it is important to get the correct advice from a tax specialist.<\/p>\n

To be eligible, a business must be within seven years of its first commercial sale, not have gross assets worth more than \u00a315m before shares, and have less than 250 full-time employees.<\/p>\n

Income tax relief<\/strong><\/p>\n

Income tax relief is generous with this scheme and investors can claim relief for a maximum annual investment of \u00a31 million, or \u00a32 million if they have invested in a knowledge-intensive company.<\/p>\n

They can claim for up to 30 per cent of the investment, meaning that they could receive up to \u00a3300,000 tax relief a year \u00ad\u2013 or \u00a3600,000 for investments in knowledge-intensive companies. This is one of the most generous tax relief schemes currently on offer in the UK.<\/p>\n

Protection from losses<\/strong><\/p>\n

The EIS scheme provides attractive loss relief at the investor\u2019s marginal tax rate.<\/p>\n

When this loss relief is combined with the income tax relief received when investing in an EIS eligible company, it greatly reduces the amount of capital at risk.<\/p>\n

Relief with Capital Gains Tax<\/strong><\/p>\n

Returns on most non-EIS investments will be liable for CGT above the CGT-free personal allowance, but providing all conditions are met when investing in an EIS scheme, all growth in value is exempt from CGT. This means investors can achieve a greater net profit, while saving their personal allowance for other investments.<\/p>\n

For help and advice on related matters please contact our expert team.<\/p>\n","protected":false},"excerpt":{"rendered":"

With the cost of living rising steeply and taxation at its highest level for decades, tax breaks are welcome, particularly for those looking to invest their money in business.<\/p>\n","protected":false},"author":2,"featured_media":4654,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[24,31,7,27],"tags":[],"_links":{"self":[{"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/posts\/4652"}],"collection":[{"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/comments?post=4652"}],"version-history":[{"count":1,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/posts\/4652\/revisions"}],"predecessor-version":[{"id":4653,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/posts\/4652\/revisions\/4653"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/media\/4654"}],"wp:attachment":[{"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/media?parent=4652"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/categories?post=4652"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/tags?post=4652"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}