EIS tax relief explained
The Enterprise Investment Scheme (EIS) is designed to help higher-risk trading companies to raise finance by offering a range of tax reliefs to investors who purchase new shares in those companies.
Statistics show that high risk companies often struggle to attract outside investment because they are too high risk for traditional sources of finances, such as bank loans, and still too small for many venture capital firms, which prefer to invest larger amounts of cash in a smaller portfolio of businesses due to the time and effort involved in monitoring each investment.
The purpose of EIS, is to help such companies overcome this problem and raise equity finance by incentivising equity investors by offering a variety of tax perks. It is very similar to its “little brother”, the Seed Enterprise Investment Scheme (or “SEIS”), but with several subtle but important differences.
There are a variety of tax perks for investors that choose to invest in qualifying companies. Read on to find out whether your company qualifies to receive equity investment under the EIS.