Income Tax Rebate - Inheritance Tax Relief - C.G.T. Deferral -

No Capital Gains Tax to Pay on Growth in Value of Your Shares

An Enterprise Investment Scheme lets you to mitigate your tax liabilities by buying shares in a company that has received EIS approval from HM Revenue & Customs.

As a UK tax payer, you can claim back 30% Income Tax by an HMRC approved EIS.

£3,000 Income Tax back for every £10k invested in an E.I.S.

There are limits...£1million*; returning £300,000 of Income Tax that you've already paid. More than enough for most of us...so browse these pages to learn about EIS. 

Income Tax Relief is claimed as a rebate through your Self-Assessment tax return. When Form EIS3 is issued by the company simply forward it to Revenue & Customs.

Take the edge off your tax billE.I.S. 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. This is equivalent to an annualised compound return of 12.62p/a when the E.I.S. shares are sold on for the same price after just 3 years. Investors should gauge the likely market for their mature EIS shares and favour firms with a credible investor exit strategy. This could be a Staff Share Purchase Plan providing incentives for employees to buy shares because their bonus pay is linked to dividend values.

* Dividend income boosts this exceptional 42% return on your investment * 

Growth is free of CGT, so for yet more Income Tax back, recycle your investment. To roll over an EIS shareholding, there needs to be a viable 'investor exit strategy'. If so, you may get a 30% tax rebate...on the same capital...every 3 years !!

Enjoy On-Shore tax breaks with an Enterprise Investment Scheme Roll-Over... 

Enjoy an EIS RollOver

By investing the proceeds from other gains into an EIS, you'll benefit from unlimited Capital Gains Tax deferral until you sell the EIS shares. Deferral relief is unlimited on a previously realised asset. It can be claimed by both individuals or trustees whose interest in the invested company exceeds 30%. There is a 4 year 'window of opportunity' for an investment in EIS to defer a gain.

And you benefit from Inheritance Tax relief on your investment after just 2 years. EIS shares generally qualify for Business Property Relief for IHT purposes. Nor is there any claw-back of Income Tax or Capital Gains Tax deferral relief upon death.

Free of CGT and IHT  

Enterprise Investment Scheme shares must be held for at least 3 years to retain all tax concessions. The company must also continue to qualify during this period.

An Enterprise Investment Scheme also permits an investor to participate in the running of a business and to receive reasonable remuneration from it. 

Looking out for investor interestsAn investor cannot be 'connected' to a company by owning more than 30% of it. A trading relationship is allowed, provided that transactions are not on terms better than for other customers. 

For instance, an investor purchasing office products for their own business could buy from a company in which they hold less than a 30% shareholding. This could be on 60-day credit, or even on a consignment stock basis, if those terms were available to other customers. Prices have to be competitive to ensure compliance. 

As a minority shareholder, you can be paid as a Non-Executive Director of a firm that supplies to your other business...and benefit from EIS tax reliefs.

Recently, Tax Tribunals have decided against at least two taxpayers, resulting in EIS relief being withdrawn. These HMRC cases (Skye Inns and Benson Partnership) illustrate why it is prudent to invest in a business that has a 'weather-eye' on all matters pertaining to Enterprise Investment Schemes...a company like Accolade!

Even a failed EIS investment attracts favourable Income Tax and CGT treatment; tax payers @ 40% risk 42% of the sum invested; those on 50% tax only 35%. An E.I.S. loss can be set against CGT liability or Income Tax due in year of disposal.


*


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


^-<-< Use this Form or the 'Contact Us' page for more information about our EIS


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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, 
Managing Director @ Accolade, 
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 Partnership Ltd © 2014

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

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E.I.S. - Reward versus Risk

Balancing risk against rewardReward & Risk have always been inextricably linked. Your personal investment portfolio should be balanced; a portion for security but also allowing for growth & income. Enterprise Investment Scheme shares have a head start in growth & income because of their unique tax advantages; you can reclaim tax that is, otherwise, lost to you forever.  30% Income Tax relief... Unlimited C.G. Tax deferral... Exemption from Inheritance Tax after just two years... and loss relief to set off against future tax (if required). 

But what about risk?

All EIS shares are characterised as suitable for wealthy & adventurous individuals who can afford to take a high level of risk and lock money away for the long term.

Investors should carefully select their EIS company on many criteria, not just the tax benefits which accrue to all HMRC approved Enterprise Investment Schemes. Of paramount importance will be selling on your shares in a way allowed by EIS rules.

Best advice is always to undertake due diligence. Return on Investment has to be balanced against the strengths and weaknesses of any shareholding opportunity.

Remember to assess potential profit rather than just past performance. Be aware of significant changes in buyer behaviour like the near-universal adoption of on-line trading in preference to mail order. Internet selling levels the playing field, allowing small, knowledgeable companies to compete against moribund multi-national rivals.

Depending on the value of funds being subscribed, expected RoI and an investors attitude to risk, appropriate questions need to be asked. Prime considerations are;

  • How long has the business been actively operating?
  • In what marketplace does the company trade? Is it a safe or risky one?
  • Is that market sector new or long established? (cutting edge versus stable)
  • How long has the current Management team been employed in the business? 
  • Are the employees shareholders and do they actively buy shares?
  • Does the company have a unique competitive advantage? 
  • Is their competitiveness likely to endure for at least 3 years?
  • Earning potential should be assessed...although dividends will be taxed!
  • Dividends need balancing against growth in share value...free of CGT.
  • Is there a strategy to create a market for trading maturing EIS shares? 
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 Accolade has a viable investor exit strategy.


UNDER CONSTRUCTION

 
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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