How you can use the Enterprise Investment Scheme to raise money for your business
The Enterprise Investment Scheme is designed to help SMEs raise finance by offering a range of tax reliefs to investors who purchase new shares.
• 30% tax relief on up to £1 million per individual, for every £100,000 of investment the actual cost is £70,000 – this allowance can be carried back to the previous tax year to offset against income tax – i.e. a theoretical £2 million could be invested of which £1 million could be carried back to the last tax year – increasingly attractive because of increasing rates of tax and restrictions on pensions contributions
• No capital gains tax – provided the shares are held for a minimum of three years, there is no CGT due on the proceeds – if the shares are held for longer you will realise the full investment potential – shelters gains from CGT & potentially sheltering substantial capital gains
• Inheritance tax – after two years from the investment date EIS qualifying companies generally fall outside the estate for IHT purposes – potentially allows considerable assets to be preserved intact away from the 40% IHT
• Loss relief – if a share should become worthless, the loss could be offset against income tax
• CGT deferral relief – allows up to three-year-old capital gains tax to be rolled over into EIS qualifying companies and potentially be further reduced by other tax allowances over a period of time
• Focus is on investing £1 million to £2.5 million in growing businesses, strong preference to invest in profitable businesses, but we can back younger businesses and turnarounds where we can see a clear route to profitability
• We become supportive funding partners – we do not attempt to manage the business
• Funding is drawn from our own client base of successful entrepreneurs and investors meaning that our portfolio companies may be able to draw on the contacts and expertise of our client investors
• Structured investments to meet the needs of the investees, aiming to provide tax-efficient investment opportunities – majority of our investments will enable our investors to be eligible for tax reliefs under the Enterprise Investment Scheme
• We negotiate and professionally manage investments which we believe will prove attractive to our network of high net-worth client investors
The Enterprise Investment Scheme at IW Capital is designed to raise funds for SMEs by offering a range of tax reliefs to potential investors. Many services offered under the EIS attract our vast portfolio of high net-worth client investors to provide finance for your business.
Investee companies may benefit from tax-efficient investments from our existing client investors, access to contacts as well as access to the expertise of other investee companies within our portfolio. This presents your company with the potential not only access finance that has been sourced in a tax-efficient structure, but also industry knowledge from seasoned professionals.
By structuring the investments to meet the specific needs of the investees, we aim to provide financing that is not only structurally beneficial for the investors, but also meets your individual business requirements.
The value of tax reliefs depend on personal circumstances and may be subject to change in the future. The availability of tax reliefs depends on the companies invested in maintaining their qualifying status.