The Eis A Government Scheme To Help The Smaller Unquoted Companies

By Author: Katie Simpson
Total Articles: 11
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When you're a first time investor there's a lot to take in. Which companies should you invest your money in and how likely are you to make a return? Well, nobody can decide this for you, but a lot of first time investors are told to think about the EIS! If like many first time investors you haven't got a clue what the EIS is, then read on for a brief overview of why it exists and why it may be a great place to start your future in investment. In particular, learn about the various excellent tax breaks that this scheme offers to its investors:

The EIS (or Enterprise Investment Scheme) is a government programme which was created to provide investors with an enticement for investing in smaller unquoted companies and organisations. For these purposes, ‘unquoted' includes plus-quoted and AIM shares. The incentive for EIS investors includes some excellent tax benefits when purchasing new shares. There are five tax reliefs currently on offer for EIS investors:

Income Tax Break - If you hold a qualifying EIS investment for more than three years you will be eligible for a reduction on your income tax by 20% the amount ...
... equal to your investment. There is a minimum payment of £500 per company but a maximum of £500,000 per annum per investor!

Loss Relief - If you dispose of an EIS share at any time and make a loss, you can offset this against the capital gains or investor's income in the year of disposal (or the previous). Losses can also be offset against Capital Gains Tax at the following rates; 10%, 18% and 28% (2010-2011).

CGT Freedom - There is No Capital Gains Tax payable on disposal of shares after 3 years, if the EIS initial income tax break was given and not withdrawn.

CGT Deferral Relief - On a different assets tax on gains realised can be indefinitely deferred, if the disposal of that asset was 36 months ago or less before the EIS investment. The deferral relief is not limited to investments of £500,000 per tax year either.

Inheritance Tax Exemption - Generally EIS investments are exempt from Inheritance Tax if you have held them for two years or more.

For more information on the EIS and to start your investment in smaller unquoted companies, try approaching a professional investment company such as CSS Partners LLP who will guide you through the process and get you started with an EIS investment now! When investing for the first time there is no better advice than to speak to someone over the phone or face-to-face about your financial situation and what you want to gain out from your first investment. Don't make any rush decisions and remember, never invest money that you cannot live without! If you know you will miss the money that you are about to invest, now is not the right time to start investing after all - don't take the risk.

The author of this article has expertise in EIS. The articles on EIS investors reveals the author’s knowledge on the same.