The enterprise investment scheme shares were designed to incentivize private owners to invest in companies. Let’s read the blog to know about the advantages of these shares.
The EIS shares provide a variety of businesses with new jobs. The tax benefits are available only when new shares are bought by the investors. These 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 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 earlier.
Reap Tax-Free Profits
The profits that are received through the investment are not liable to any taxes. Also, 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
The EIS shares investments are completely free of inheritance tax. The EIS inheritance tax relief is provided after holding the investment for two years.
Prerequisites To Applying For EIS Schemes
The Company Must Be In The Business
The company must have been trading for even years when one seeks to apply for the 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.
The Gross Assets
Besides this, the company must have less than 15 million pounds in gross assets.
These should include fixed tangible, current and intangible assets.
A 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.
Agree To The Risk To 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. It provides long-term benefits and helps the companies to grow from strength to strength. To invest in these shares, one has to adhere to some rules.
