EIS (Enterprise Investment Schemes)

Income Tax

Income tax relief of up to £500,000 per individual per tax year can be claimed on investments made on or after 6 April 2008. The relief is given at the lower of the amount of income tax payable by the investor or 20% of the amount invested.

Capital gains tax (CGT)

If the shares are held for at least three years, there will be no CGT due on any profit made. Any capital loss on the sale of the shares can be offset against other chargeable gains.

CGT can also be deferred through EIS investment by using the gain from the disposal of another asset to fund the EIS. The gain can be deferred as long as investment in the EIS is made within a period commencing one year before and three years after the disposal of the asset

Dividends

Because the companies in which the investor holds shares are small and usually in the early stages of development, they are unlikely to pay dividends. If dividends are paid to the investor, they are taxable in the usual way.

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