The Enterprise Investment Scheme ("EIS") was set up to provide incentives for private investment in small unquoted companies (including AIM). The changes in the 2004 Budget now leave the EIS as the only tax efficient investment offering a capital gains tax deferral.
EIS tax reliefs are generous. There is no limit on the amount of capital gains that can be sheltered under EIS. The maximum that can be invested in EIS in the tax year 2006/07 and following has been increased from £200,000 to £400,000
Another attraction of the EIS is the ability, for shares issued after 5 April but before 6 October, to claim for some of them to be treated as though they had been issued in the preceding tax year, obtaining the relief applicable to them as a reduction in the income tax liability for that year. The most that can be treated in this way is the lesser of half the amount invested in this period or £25,000.
Available reliefs for investors under the EIS scheme:
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