Benefits of an Enterprise Investment Scheme

As other forms of investment under-perform, it's time to take a fresh look at all the Invest in an EIS when Stock Markets under-performtax advantages offered by EIS. Previously perceived 'risks' need re-assessment, based on experience 'gained' from a series of Stock Market crashes.

Large corporation share values have fallen dramatically! Capital invested in a small, well-managed trading firm can be a profitable asset; especially E.I.S. shares.

HMRC Enterprise Investment Scheme approval status transforms a business into a compelling share purchase for people who pay too much tax. 42.85% total return on investment is generated by virtue of tax relief alone; equivalent to 12.62% p/a annualised compound return when shares are sold at the same price after 3 years. 

Investors should favour firms with a credible investor exit strategy. For instance, a Staff Share Purchase Plan whereby employees' pay is linked to dividend value.

There are no management fees to pay on Enterprise Investment Scheme shares. Fund managers often charge 5% on Stock Market investments. Additionally, annual management fees of around 1.5 per cent are not uncommon. These costs quickly erode your capital; especially now, as inflation is running at a high level.

Fund 'supermarkets' have taken to adding extra charges to justify those offerings which don't pay them commissions. This means it costs you more to hold a small sum in tracker funds; typically .5% per year of your total capital invested. Flat-rate fees of £1 or even £2 a share per month hit small scale investors even harder.

The Financial Services Authority is banning 'trail commissions' from 2013 onwards. This will likely lead to hefty up-front fees for financial advice provided by an IFA.

Dividend re-investment can create charges when transacted by fund managers. Even online internet share trading costs you commission of up to £13 per deal.

Watch out for 'performance fees'...a financial sting in the brokerage tail. When your investment achieves a capital gain, brokers take a high % charge for their advice. 

Investors see tax rebates from EIS as better than relief on pension contributions which are limited to £50,000 for 50% taxpayers. The immediate refund of Income Tax generated by an EIS investment can be switched to a pension contribution.

EIS shares should be kept for 3 years to retain all the tax advantages, then sold.
The redeemed investment can then be recycled into the same or another Scheme.

Tax-free gains from successful EIS investments can be transferred into pensions.
An increase in the value of Enterprise Investment Scheme share value is free of Capital Gains Tax...but any loss can be offset against future Income Tax or CGT.

Capital Gains Tax on profits made from other investmentsAccolade EIS for Capital Gains Tax Deferral can be deferred until E.I.S. shares are sold. Delaying tax due will give time for more efficient planning.

CGT deferral is particularly advantageous as E.I.S. shares become exempt from Inheritance Tax after 2 years. There is no Capital Gains Tax payable upon death. 

No amount of tax 'sweetener' can turn a bad investment into a good one...only lessen the bitterness when it turns sour. Avoid having your tax relief withdrawn. Choose a company that understands and complies with complex E.I.S. regulations. Whilst there can be no pre-arranged agreement for realising mature EIS shares, it will be some consolation to know that Office Europe Ltd has a viable investor exit strategy.


Accolade Office - Enterprise Investment Scheme opens to investors - 2016

Phone 0141 774 4600 to check availability of this 30% tax saving EIS


An Enterprise Investment Scheme is by far the best way of exploiting tax breaks.

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EIS relief takes the edge off your tax bill

Inaccessible Pinnacle 
Sgurr Dearg 
Isle of Skye 
Scotland

Photo taken by Bill Gray, 
Manager @ Office Europe
Sunday May 1st 2011

"He either fears his fate too much,
Or his deserts are small,
That puts it not unto the touch, 
To win or lose it all."

Extract from 'My Dear and Only Love' written in 1643 by James Graham, Marquis of Montrose.












Original text & images are Copyright to Accolade - Office (europe) Limited © 2016

Original images have been pixellated with a pattern that makes them identifiable as the unique copyright property of Accolade Office- europe Limited. © applicable within all legal jurisdictions, worldwide.

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An Enterprise Investment Scheme is an appropriate venture for UK income tax payers who can self-certify being a sophisticated investor.
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