THE ENTERPRISE INVESTMENT SCHEME

Transcription

1 INVESTMENT TOOLKIT THE ENTERPRISE INVESTMENT SCHEME

2 HOW CAN HELP? Our areas of specialism are Media, Infrastructure and Real Estate. We are proud of our extensive industry experience in these sectors, having raised and deployed over 9 billion during our 19 year history. Our successful track record is due to a clear strategy of achieving steady growth and retaining shareholder value. Our goal is to provide clients with a range of innovative investment opportunities, from a firm that they can trust to manage their money carefully. OUR COMMITMENT TO YOU Careful, transparent management of investment opportunities under strategies designed to deliver attractive, risk-adjusted returns Dedicated nationwide client relationship team and a central client services team dedicated to supporting your investment needs Blue-chip professional infrastructure providing first class commercial, finance, legal and technical expertise on investment activities OUR EXPERTISE A deep knowledge of Media, Infrastructure and Real Estate Access to a broad range of capital sources Exceptional track record of balancing risk and return Proven ability to nurture and grow successful businesses Extensive industry relationships Experienced team of industry professionals The value of an investment in an EIS qualifying company can go down as well as up and an investor may not get back the full amount invested.

3 HOW AN EIS INVESTMENT WORKS CASE STUDY: AN EXAMPLE OF EIS IN PRACTICE Anna is a 45 year old executive with an income of 75,000. She requires tax-efficient savings and a broader range of investments. WITHOUT INVESTMENT WITH 15K EIS INVESTMENT 19K 14.5K 12K 7K 40% 20% 30,000 33,500 75K SALARY 63,500 15K EIS INVESTMENT 30% CREDIT= 4,500 0K 0% 11,500 11,500 SOLUTION: 15K EIS INVESTMENT Anna invests 15,000 into an EIS qualifying fund. She claims income tax relief of 4,500 (30% of 15,000), reducing her tax bill from 19,000 to 14,500. The value of an investment in an EIS qualifying company can go down as well as up and an investor may not get back the full amount invested.

4 WHAT IS THE The Enterprise Investment Scheme (EIS) was established by the UK government in 1994 to encourage individuals to invest in small unquoted trading companies. Investors could benefit from the performance of the underlying companies and in addition to the commercial benefits, the government introduced a number of tax benefits to individuals investing into EIS qualifying companies. INCOME REDUCTION ON INVESTMENTS UP TO 1MILLION PER ANNUM INVESTED INTO EIS QUALIFYING INVESTMENTS BY CLIENTS OF INGENIOUS Since the EIS was launched, almost 30,000 individual companies have benefited from the scheme and over 12.2 billion of funds have been invested (Source: HMRC). At Ingenious, clients have entrusted us to invest over 1 billion into EIS qualifying investments on their behalf.

5 HOW DO EIS FUNDS WORK? As well as investing directly into EIS qualifying companies, investors can also invest through an EIS fund, which will invest in a number of qualifying companies on the investor s behalf. The investor is still the owner of the shares. The EIS fulfils a much needed role in encouraging private investment into small and growing British companies and fostering the innovative, entrepreneurial spirit that drives private enterprise. Lord Howard Flight, Chair of the EIS Association WHAT ARE THE BENEFITS OF THE EIS? 1. INCOME RELIEF Reduction in income tax liability amounting to 30% of the total investment up to an annual maximum of 1 million. Income tax relief on investments of up to a further 1 million subject to the annual maximum investment, can also be carried back to the previous tax year. Relief cannot exceed an amount which reduces the investor s income tax liability to nil. 2. CAPITAL GAINS DEFERRAL An investor can defer paying capital gains tax (CGT) on all or part of a chargeable gain by investing an amount equal to the gain in qualifying EIS shares. Applies to any chargeable gains arising three calendar years prior to, or one year after, the issue of qualifying EIS shares. Gains are deferred until a chargeable event e.g. disposal of the EIS shares or earlier breach of the EIS rules.

6 WHO COULD INVEST INTO AN EIS? Investments into EIS qualifying companies are designed to benefit UK taxpayers to whom any of the following apply: Income tax liability in the current or previous tax year Capital gains to defer Concerned with potential inheritance tax exposure INHERITANCE RELIEF ON THE VALUE OF THE INVESTMENT AFTER TWO YEARS AS LONG AS YOU STILL OWN THE SHARES ON DEATH. 3. FREE GROWTH There is no CGT payable on gains realised on disposal of EIS investments, if income tax relief is claimed. This applies if an investor has received income tax relief (which has not subsequently been withdrawn) on the cost of the shares, and after they have been held for the required period (at least three years). 4. SHARE LOSS RELIEF If EIS shares are disposed of at a loss, an investor can elect that the amount of the loss, net of any income tax relief given, can be set against their income in the year in which the shares are disposed of, or the preceding year, instead of being offset against any capital gains. 5. INHERITANCE RELIEF Investments qualify for business relief so are exempt from inheritance tax after two years.

7 EIS INVESTMENT LIFECYCLE FUND OPENS Submit application and funds Investment admitted FUND CLOSES SHARES ALLOTTED BI-ANNUAL REPORT & FINANCIAL STATEMENT EIS3 certificates submitted with tax returns EIS3 certificates issued to investors by Ingenious HMRC process EIS3 certificates 4 MONTHS TRADING BEFORE 31 JAN If certificates are received after 31 Jan, tax relief can still be claimed after submission of the tax return. MANAGER/INVESTEE COMPANIES APPLY TO HMRC FOR EIS3 CERTIFICATES An EIS3 is a government-issued certificate. Once an EIS3 certificate is received, an investor can claim relief. This timetable is indicative only; the timing of receipt of EIS3 certificates will vary for each EIS company depending on time required to allot shares, commence trading and for HMRC to process certificates.

8 WHAT ARE THE RISKS OF AN EIS QUALIFYING INVESTMENT? An investment in an EIS qualifying company involves a high degree of risk The level of returns, availability and timing of relief for investors may be impacted by: - Returns generated by the investee companies - An investor s tax position and changes to legislation - The availability of investment opportunities for the fund manager - The EIS qualifying status of investments made by the fund manager Tax rules, levels and regulations are subject to change and the availability of the tax reliefs will depend upon individual circumstances Past performance is not a guide to future performance and may not be repeated The value of an investment in an EIS qualifying company can go down as well as up and an investor may not get back the full amount invested An EIS qualifying investment should be considered as a medium term investment Investments made into an EIS qualifying company are likely to be illiquid and must remain within the scheme for at least three years FIND OUT MORE At Ingenious, we offer a number of EIS qualifying opportunities. If you think an EIS investment may be right for you, ask your financial adviser how we can help. Your adviser can contact our Client Relationship Team on or hello@theingeniousgroup.co.uk IMPORTANT INFORMATION This document is issued by Ingenious Capital Management Limited (the Manager), 15 Golden Square, London W1F 9JG, which is authorised and regulated by the Financial Conduct Authority. This information does not constitute or form part of any offer for sale or solicitation of any offer to buy or subscribe for any fund or service. Any decision in connection with an investment in any fund or service should be made only on the basis of information contained in the relevant brochure and/or investor agreement. If you are in any doubt about the content of the relevant brochure, investor agreement and/or this document and/or any action you should take, you are strongly recommended to seek advice immediately from a financial adviser authorised under the Financial Services and Markets Act 2000 who specialises in advising on opportunities of this type. Nothing in this document or the Brochure constitutes investment, tax, legal or other advice by the Manager and your attention is drawn to the section headed Risk Factors in the relevant brochure. The services and funds provided by the Manager will not be suitable for all recipients of this document. Nothing in this document or the relevant Brochure constitutes investment, tax, legal or other advice by Ingenious. The information in this presentation is for illustrative purposes only and does not constitute or form part of any offer for sale or solicitation of any offer to buy or subscribe for the Service or any securities Ingenious Capital Management Limited. 05/17