UnaVida | Enterprise Investment Schemes

Enterprise Investment Schemes

Enterprise Investment Schemes – Latest UnaVida House View on Alternative Investments.

Enterprise Investment Scheme Investing has proved quite popular, with a 30% tax reduction against income tax – and many EIS schemes backed by assets, what’s not to like!

New Legislation

A series of changes to the qualification rules for EIS means that the EIS companies are struggling to find companies that fit the new criteria. That means that demand for EIS products could outstrip supply.

The rule changes also mean that EIS investors will have to embrace more risk as the Government has indicated that it wants EIS investment to go to new companies, trading in new companies can be more fraught.

We wonder however if demand will persist at previous levels, as quite apart from the new rule changes, there is ongoing frustration and annoyance at delays of the issue of the EIS3 certificates (to enable he investor to claim tax relief).

So although one has to hold an EIS ostensibly for 3 years, any non-trading period does not count, in many cases it will be at least 4-5 years before you are able to recover any capital from an EIS.

The frustration and annoyance (both for clients and professional advisers) is multiplied when dealing with EIS portfolio investments, as via an EIS portfolio of 18 different investments over time. An investor will have to wait for 18 different EIS3 forms to be able to claim his full tax rebate.

When one also takes into account that tax relief may have had to be claimed over three different tax years, then the professional time spent may exceed any small amount of adviser fees paid by an EIS company.

Before one rushes away from the EIS market place, it is worth remembering that with an EIS, one is able to :-

  1. Carry back one year and recover tax already paid.
  2. EIS has far higher maximum investment level than a VCT.
  3. EIS investment if held, will be exempt from IHT.
  4. You can hold over CGT with EIS.

If you are a high rate tax payer then it may be worthwhile considering pensions, EIS and VCT investment – do seek advice, to contact us CLICK HERE.

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A pension is a long-term investment that typically cannot be accessed until age 55 (57 from April 2028). The level of pension benefits offered could change depending on the value of your investments (and any income they may generate).

The interest rates in effect at the time you begin receiving benefits may also have an impact on your pension income. The tax consequences of pension withdrawals will depend on your unique situation. In later Finance Acts, tax rates, tax bases, and tax relief may change.

The opinions expressed by Ray Best are meant to inform and educate. Before making any investment decisions always take advice that is pertinent to your investment personality and financial situation.

You are aware that past performance will not necessarily be repeated in the future, but you should be aware that persistent poor performance invariably will.

The value of an investment and the income from it could go down as well as up.

The return at the end of the investment period is not guaranteed and you may get back less than you originally invested.

UnaVida Wealth Management Ltd. is directly authorised and regulated by the Financial Conduct Authority (440577).

The guidance in this website is primarily aimed at a UK audience and is subject to regulation by the Financial Conduct Authority (FCA).

The Financial Conduct Authority does not regulate tax planning, estate planning, or wills and any form of legal documentation.