With more relaxed rules on the horizon, there has never been a better time to consider funding new ventures via the Enterprise Investment Scheme (EIS) or Seed Enterprise Investment Scheme (SEIS), schemes that seek to encourage investment in small or start up ventures by offering generous tax reliefs to the investors.
The Enterprise Investment Scheme was introduced in 1994 and enabled subscribers of ordinary shares in ‘qualifying’ companies to benefit from tax reliefs. These include reductions of up to 30% on income tax liability as well as CGT exemptions and deferrals upon disposal of the investments. Initially, an annual investment limit of £500,000 per investor was set.
However, from 6 April 2012, the annual investment limit is set to increase to £1 million per investor. This will be coupled with a significant relaxation of the current £2 million ‘share issue limit’ within each company that will benefit from EIS relief. From 6 April 2012 this limit will be increased to 10 million in every 12 month period. It is hoped that these changes will attract a wider range of investors to smaller perhaps higher-risk companies, thus helping them to flourish.
Castle Rock Brewery, the Nottingham-based brewer and pub operator used this approach to raising cash last May, securing a site for its latest pub after raising £600,000 via an Enterprise Investment Scheme (EIS). Chairman Chris Holmes commented at the time that “If we can make a success of this then we will certainly be looking at duplicating
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