Enterprise Investment scheme
Lunar Energy is a qualifying company for Enterprise Investment Scheme (EIS) purposes and UK taxpayers who invest in a qualifying EIS can benefit from the following tax advantages.
An Enterprise Investment Scheme (EIS) is a government scheme that provides a range of tax reliefs for sophisticated investors who subscribe for qualifying shares in qualifying companies. There are currently five separate EIS tax reliefs:
• Income Tax Relief
• CGT Deferral Relief
• CGT Freedom
• Loss Relief
• Inheritance Tax Exemption
Income Tax Relief: an investment of up to £1,000,000 in shares in an EIS company qualifies for income tax relief at 20% if the qualifying criteria are met for 3 years.
CGT Deferral Relief: Gains on other assets may be deferred (and reinstated on any subsequent disposal of EIS shares) if reinvested into qualifying EIS companies.
CGT Freedom: Gains on disposal of EIS shares are exempt from tax if the qualifying criteria are met for 3 years.
Loss Relief: if EIS shares are disposed of at a loss at any time then such loss can be set against capital gains or income in the year of disposal or the previous year. For a 40% taxpayer this limits the investment exposure to 48p in the £ in the case of a total loss.
Inheritance Tax exemption: EIS investments are generally exempt from Inheritance Tax after 2 years.
EIS is suitable for those investors who wish to include in their portfolio some high risk companies and investors are always advised to seek the opinion of their professional advisers prior to making any investment.
Further information regarding EIS is also available by following these links:
HM Revenue & Customs
Enterprise Investment Scheme Association