EIS

In this lesson

1. 0:00 Enterprise Investment Scheme overview
2. 0:16 EIS investor and company requirements
3. 1:01 Tax relief and investment limits
4. 2:51 CGT reinvestment and disposal rules
5. 3:36 Loss treatment and inheritance tax relief

About this lesson

This video covers the key qualifying conditions for both investors and companies, the main tax reliefs available (including the 30% income tax relief up to £1 million), and how gains, losses, and dividends are treated. Understanding EIS is essential for Taxation papers, as it's a common exam topic that tests your ability to advise clients on tax-efficient investment strategies. The Enterprise Investment Scheme encourages investment in small businesses by offering significant tax incentives. As a qualifying investor, you subscribe cash for new ordinary shares in an unquoted trading company, and in return, you can claim 30% income tax relief on your investment (up to £1 million per tax year). The relief reduces your income tax liability and can be carried back to the previous year if needed. You'll also benefit from capital gains tax deferral if you reinvest proceeds from asset sales, and any gains on shares held for three years or more are completely exempt from tax. The scheme also provides valuable loss relief and inheritance tax planning opportunities. If your investment goes wrong and you make a loss, you can claim it as an allowable loss against capital gains, or elect to convert it to a trading loss and set it against any income. Shares held for more than two years qualify for 100% business property relief, meaning there's no inheritance tax to pay. Dividends from EIS shares are taxable as income, so it's important to factor this into your planning when advising clients.

Duration: 4m