What Companies qualify for EIS?
In order to access EIS relief, the business that you intend to invest in must satisfy the requirements under the EIS scheme which are very specific. Notably the business must:
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Not be listed on the stock exchange (except under AIM)
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Have a permanent establishment in the UK
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Have gross assets of not more than £15m immediately pre-investment and £16m immediately afterwards
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Have fewer than 250 employees at the time of investment
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Are not under the control of another company
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Carry on a qualifying trade as defined by the EIS
How do I claim the relief?
There is a formal application process made through HMRC. When considering making an investment and want to take advantage of the EIS scheme, you need to gain confirmation that the business will qualify for EIS relief before committing to invest. You should normally ask the investee company to demonstrate that they have obtained provisional approval from HMRC that the business qualifies for EIS investment, in advance of you closing the deal and the shares being issued.
It is important to note that the levels of reliefs from, taxation can change and the value of a relief depends upon the individual circumstance of the investor. Not all investors will qualify, for example, there are rules about whether you were previously connected to the business. There are also restrictions on the type of shares that can be issued which must be Ordinary shares.
If you are considering making an EIS investment you should ensure you fully understand the rules and also seek professional advice. CLICK HERE for further information on the EIS scheme.
