The enterprise investment scheme shares incentivize private owners to invest in companies. These shares provide a variety of businesses with new jobs. The tax benefits are available only when new shares are bought by the investors.
The EIS shares are one of the best investment schemes available in the UK. Since 1994, this form of business has gained popularity and earned a net worth of more than 24 billion pounds.
Benefits Of EIS Shares
Help Companies Make Loads Of Money
The EIS shares are extremely safe and help investors make loads of money. These help people with their retirement plans and provide up to 30% income tax relief.
Get More Returns
These should be held by the investors for three years to bring them long-term benefits. The business owners receive the same rate of return per pound that they invested in earlier.
Reap Tax-Free Profits
The profits that are received through the investment are not liable to any taxes. Also, the businessmen get an EIS deferral relief which is a tax advantage which allows investors to defer an existing capital gains tax bill when they have accrued to the following year.
Exempted From IHT
Investments in EIS shares are completely free of the inheritance tax. The EIS inheritance tax relief is provided after holding the investment for two years.
Rules To Follow While Applying For EIS Schemes
Must Be In The Business
The company should be trading for even years when one seeks to apply for EIS funding. It must have around 250 employees.
Fall Into HRMC Categories
Along with this, the business must fall into the category of HRMC’s excluded trades such as banking, insurance, money-lending, property development and legal services.
Have Gross Assets
Besides this, the organization should have less than 15 million pounds in gross assets. These might include fixed tangible, current and intangible assets.
Passed The Uk Permanent Establishment Test
Another test that the company has to get is the UK permanent establishment test.
On the other hand, a non-UK company should have a fixed place of business in the UK and a native agent who acts on the behalf of the company and exercises control. He has the authority to enter into a contract with anyone.
Should Agree To The Capital Condition
This rule was introduced in 2018 which states that the company’s objective is to establish a long-term association and find opportunities to grow. Also, by investing in the company the investors will be putting their capital at significant risk.
To sum it up, the EIS shares are a good option to grow one’s business. These provide long-term benefits and help the companies to grow from strength to strength. To invest in these shares, one has to adhere to some rules.
