EIS/SEIS/VCT Investors

There are tax reliefs available on the subscription of shares in qualifying EIS, SEIS and VCT companies. If the timing and amount of investment has been properly planned, this can result in significant tax savings.

Here is a summary of the tax reliefs available on these investments:

Enterprise Investment Scheme (EIS)

  • Income tax relief is available at a flat rate of 30%
  • The maximum investment qualifying for EIS income tax relief is £1 million in a tax year
  • It is possible to carry back an EIS subscription to the preceding tax year
  • There will be withdrawal of income tax relief if the investor disposes of his shares in the SEIS within three years of issue
  • Any gain on the sale of EIS shares is exempt from CGT if certain conditions are satisfied at the date of disposal
  • Any loss on the sale of EIS shares is allowable for capital gains tax purposes
  • There is also reinvestment relief available if an individual sells an asset and reinvests the sale proceeds in acquiring qualifying EIS shares

Seed Enterprise Investment Scheme (SEIS)

  • Income tax relief is available at a flat rate of 50%
  • The maximum investment qualifying for SEIS income tax relief is £100,000 in a tax year
  • It is possible to carry back a SEIS subscription to the preceding tax year
  • There will be withdrawal of income tax relief if the investor disposes of his shares in the SEIS within three years of issue
  • Any gain on the sale of SEIS shares is exempt from CGT if certain conditions are satisfied at the date of disposal
  • Any loss on the sale of SEIS shares is allowable for capital gains tax purposes
  • There is also reinvestment relief available if an individual sells an asset and reinvests the sale proceeds in acquiring qualifying EIS shares

Venture Capital Trust (VCT)

  • Income tax relief is available at a flat rate of 30%
  • The maximum investment qualifying for VCT income tax relief is £200,000 in a tax year
  • There is no carry back as with EIS and SEIS
  • Dividends received on first £200,000 invested in VCT shares is exempt from tax
  • There will be withdrawal of income tax relief if the investor disposes of his shares in the VCT within five years of issue
  • If the shares are sold at a profit, any gain is exempt from CGT
  • Losses incurred on the sale of VCT shares are not allowable for capital gains tax purposes

At Martax, we can help you:

  • How much you should invest in the above qualifying shares after reviewing your tax position
  • When you should invest in these shares
  • Whether you should claim relief in the current year or carry back your investment to the previous year
  • Calculation of expected income tax relief available on the investment

If you have made an investment or thinking of making an investment in any of the above qualifying shares, please contact us on 020 8330 3167 or email us on tax@martaxpersonaltaxsolutions.com

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