Under the Enterprise Investment Scheme (EIS), large tax reliefs can be gained by investing in ordinary shares with unconnected individuals in certain unquoted companies.
However, uptake is surprisingly scarce with many unaware of the Scheme or put off by the seemingly daunting task of meeting multiple conditions. But the overall benefits far outweigh the time needed.
Potential reliefs include: - income tax relief at 30% of the cost of the shares, subject to a £300,000 cap - the ability to carry back any or all income tax relief to the previous year - capital gains tax relief at 100% - loss relief calculated on the amount of the loss minus any income tax relief gained; and - capital gains tax deferral relief.
In all cases A HMRC clearance should be obtained.