Budget 2008

Enterprise Investment Scheme (EIS)

Income tax

• Relief at 20% of subscription†.
• Relief on subscriptions of up to £500,000 (£400,000 2007/2008) per tax year.
• Minimum subscription £500 per scheme per tax year unless through an approved fund.
• One year carryback available for the lesser of £50,000 and 50% of amount invested in shares issued before 6October in tax year.
• Holding period 3 years from later of issue date and commencement of relevant trade.

Capital Gains Tax

• Where income tax relief has been obtained original investor exempt from capital gains tax on disposal after 3 years.
• Chargeable gains on any assets can be deferred by reinvestment into EIS shares.
• Losses on the first disposal of shares can be relieved against income or capital gains.
• No limit on amount of gains that may be reinvested.
• Reinvestment must occur from 1 year before to 3 years after date of gain.

Qualification rules for the Enterprise Investment Scheme are complex, HM Revenue & Customs’ approval required.

† Limited to tax liability for year of investment.
‡ Subject to approval by European Commission.