April, and the end of the tax year, is often the busiest time of year for financial services, investors and businesses. Tax efficient investments such as the Enterprise Investment Scheme can help to extend the tax year, allowing investors to make the most of the last year’s available tax allowances.
The UK’s investor community is crucially important to the small business sector in Britain with over £10billion in alternative finance being raised in the last two years alone. The Enterprise Investment Scheme offers an alternative to traditional bank lending for businesses especially to innovative, IP-based SMEs, which is critical at a time when many banks have withdrawn from traditional SME lending and consulting.
This year marks 25 years of the Enterprise Investment Scheme. In the last quarter of a century over £18billion has been raised for small businesses looking to grow and scale. The scheme offers an alternative to traditional bank lending for businesses especially to innovative, IP-based SMEs. Through EIS investors can support British businesses whilst taking advantage of generous, Government-backed, tax efficiencies at the end of the tax year.
It is also possible to ‘carry back’ all or part of your EIS investment to the preceding tax year as long as the limit for relief is not exceeded for that year. (The limit for EIS is £1m per tax year, rising to £2m provided £1m of this is invested in knowledge-intensive companies.) This means that you can make a subscription of £3m EIS shares in 2019/20 with a carry back of £1m to 2018/19 so long as your EIS cap for 2018/19 is not exceeded.
Our offering not only allows businesses to secure funding at rates that would otherwise be unavailable from most traditional banks or lenders, but also gives investors the opportunity to make the most of their capital in a time of historically low interest rates. These new innovative ways of securing alternative finance will surely be a prominent part of the Government’s industrial strategy for those that have founded their businesses upon intellectual property and new technology.
