Choosing the Enterprise Investment Scheme is one of the best investment decisions. Decades after being established by the UK government, this programme has continued to attract many investors. This can be attributed to how it impacts startups and investors. Suppose you are searching for an investment opportunity; it’d be best to look for an EIS-eligible company to invest in.
Potential for high returns
The startups in this scheme are young companies with high growth potential. Investing in them gives you a better chance of reaping money if the company maintains its growth trajectory and share prices increase. Companies are always innovative, have access to funding, and get government support that enables growth. However, before investing, it’d be best to run a background check on the company to ascertain eligibility and compliance.
Tax reliefs
EIS startups offer various tax reliefs such as income tax relief, loss relief, and capital gains tax deferral. You also get inheritance tax relief to pass the investment to your beneficiary. However, these tax advantages have strict tax laws that you must comply with for the benefits. That’s why you need experts like Allen and Atherton accountants to advise you and keep you updated on the legislation changes. These professionals also offer tax planning services to minimise liability and reclaim in case of loss.
Staff Quote:Â At Allen & Atherton, we understand that EIS tax savings are one thing, but you still need an accountant on hand to make sure your reclaim is handled correctly, we work with many clients who need help with their EIS reclaim. – Bob Hughes, Allen & Atherton
Risk mitigation
Unlike other investment options, EIS has risk mitigation synonymous with investing in high-risk ventures. The ventures have this feature because of government support through loan guarantees and R&D tax credits. In addition, you have tax advisors who can help you with due diligence before you invest by considering your investment goals and the company’s growth potential.
Diversification
The EIS-eligible companies span different industries, with each startup having its structure, investment limits, and growth target. Some, like the knowledge-intensive companies, have double investment limits, which enable you to invest more and increase your earning potential. This makes EIS companies ideal for diversifying your investment portfolio by spreading it in different industries and companies. However, it’d be best to conduct your research on the industry to understand its potential before investing.
Flexibility
This investment option is also flexible regarding the capital and duration you invest. You can invest above the minimum, a feature that makes it accessible to any eligible UK resident. The investments also have longer-term horizons, with the minimum being a three-year holding period to retain the tax benefits. However, if necessary, you can sell the shares before three years’ end.
Social impact
Investing in an early-stage, high-risk, innovative company can create a long-lasting impact. Such companies create products or services that serve the community well. You aren’t entirely doing it by supporting these companies for the money. Better yet, you have the government’s support, which covers you should the company dissolve and shares lose value.
Investing your money in a company in its early stages, such as those in the EIS programme, increases your chances of high potential earning and the benefits above. However, such programmes come with strict rules and regulations to prevent misuse for tax evasion. In addition, the EIS tax laws constantly change, hence the need for professionals like Allen and Atherton accountants to advise you and recommend how to maximize the benefits. Hiring experts from such a reputable firm enhances your chance of getting better service due to five branches worldwide, giving it a wider reach and over 200 employees in each branch to help you.
