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This year marks 25 years of the Enterprise Investment Scheme. In the last quarter of a century over £18 billion has been raised for small businesses in the UK looking to grow and scale through these schemes.

The Enterprise Investment Scheme offers an alternative to traditional bank lending for businesses especially to innovative, IP-based SMEs, which is doubly critical at a time when many banks have withdrawn from traditional SME lending and consulting.

Supporting business with Enterprise Investment Schemes

Through EIS Investors can support British businesses whilst taking advantage of generous, government-backed, tax breaks at the end of the tax year. It is also possible to ‘carry back’ all or part of your EIS investment to the preceding tax year as long as the limit for relief is not exceeded for that year.

With a 30% upfront income tax relief and capital gains tax deferral, EIS can offer a good route into small business investment whilst planning for tax liabilities. The scheme also offers inheritance tax exemptions for the shares bought through it after two years, meaning that it can also benefit those looking into estate planning as the UK government predicts over £5 billion in IHT revenue next year.

“The EIS continues to be one of the standout initiatives for innovative businesses and investors with a bright future,” explains Mark Brownridge, Director General of the Enterprise Investment Scheme Association.

One of the best ways to make the most of the options available to investors is through alternative finance. Innovative businesses more often than not require innovative investment routes. These routes including Enterprise Investment Schemes have become far more mainstream in recent years, with more investors than ever using these schemes as part of their investments.

Making the most of Enterprise Investment Scheme allowances

The ‘carry back’ feature of EIS also allows investors to make the most of allowances remaining from the last tax year, making it an attractive opportunity to those who may have missed out last week.

Innovative products like the Enterprise Investment Scheme portfolio service from IW Capital, which is launching this April, give investors the opportunity to get involved with EIS at a lower threshold than is typically available.

The minimum investment of £10,000 means that up to 39% – 17,482,377 – of British adults could make use of the scheme in future, according to research into the nations investable assets. This is in addition to the sector alumni and serial investors that traditionally use EIS.

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Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Stuart Fieldhouse

Stuart Fieldhouse

Stuart Fieldhouse has spent 25 years in journalism and marketing, including as a wealth management editor for the Financial Times group, covering capital markets and international private banking, and as an investment banking correspondent for Euromoney in Hong Kong. He was the founder editor of The Hedge Fund Journal.

Stuart has worked at CMC Markets, supporting the re-launch of its global financial spread betting and CFD trading platforms. He is also the author of two books on trading, published by Financial Times Pearson. Based in The Armchair Trader’s London office, Stuart continues to advise fund managers, private banks, family offices and other financial institutions.

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