The following Owner-Managed Businesses guidance note by Tolley provides comprehensive and up to date tax information covering:
The EIS offers substantial tax incentives to investors in companies which qualify. The tax incentives for EIS investments are intended to encourage investment in high-risk companies. Therefore, there are stringent conditions associated with EIS reliefs and tax advice on EIS should be undertaken and supervised by a suitably experienced practitioner. Terms of engagement for EIS work should be carefully drafted, in particular because conditions are tested on an ongoing basis and tax advisers should ensure that they are not liable for the results of any future action, which will be out of their control, which affects qualification for EIS.
In summary, tax reliefs under EIS are as follows:
The SEIS was introduced on 6 April 2012 in order to provide greater tax incentives to smaller and earlier stage businesses. SEIS is heavily based on EIS. The legislation introduced by Finance Act 2012 contains many of the same features and has been subject to the same modifications such as those in FA 2018, s 14 introducing the risk-to-capital condition.
The key differences in the incentives available are that:
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