What Is An Enterprise Investment Scheme & How To Find One Suitable?
An enterprise investment scheme, commonly referred to as EIS, is a scheme that makes investing in innovative companies attractive for investors. The EIS scheme is government-backed, and it offers investors lucrative tax incentives when investing in companies qualified for the scheme. What makes this type of investment so attractive to investors is that they can claim up to 30% of the value of their investment back, making it a desirable tax incentive. However, there are rules for the companies that qualify for EIS investments to follow, which are listed below.
Companies That Do Not Qualify For EIS Investment
Some companies do not qualify for EIS investment, and there are specific industries where you cannot use this investment model. Some of the industries and types of companies that do not qualify for EIS investment include:
- Coal Production
- Steel Production
- Ship Building
- Legal & Accounting Services
- Hotel & Care Home Operation & Management
- Land & Property Development
- Companies Receiving Royalties Or License Fees
There are others to add to this list, including financial companies offering banking, insurance, loans, and other financial products. You can find more information about the companies that qualify for the scheme by clicking here. You may find that your company is eligible for this scheme, making it significantly easier to find the investment your business needs to take it to the next level of success.
What Companies Qualify For EIS Investment?
Many companies qualify for the EIS scheme, and other than the industry you are in, there are only a few criteria you must meet to ensure your company meets the scheme’s requirements. The first criteria to satisfy is that the company must be a trading business. The second criterion is that the company must be unlisted and not on any stock exchange. There is an exception to this as it is possible to qualify for the EIS scheme if your business is listed on AIM and not listed anywhere else. AIM is a sub-division of the London Stock Exchange, which started in 1995 and replaced the Unlisted Securities Market. If your company matches these criteria, EIS investment opportunities are available for potential investors, which can help you raise the capital your business needs to grow.
Some Of The Benefits For Investors
EIS investors can claim back 30% of their investment against tax, making it a huge incentive for them, but there are other benefits they can enjoy as well. When they take part in this scheme, they can dispose of their shares without paying capital gains tax, and it also allows them to defer payment of capital gains tax. If the business they invest in ultimately fails, they can also claim loss relief against the investment. They can also leave the investment in their will to another party free of inheritance tax, so there are many reasons why this is an attractive investment opportunity. If your business needs to raise investment, you may want to look at the EIS scheme and see if your company qualifies. It can turn your business into an attractive investment opportunity for investors and could be the catalyst it needs to grow.