EIS and Seed EIS: Investors feel confident about UK SMEs and are looking to invest

Background

In a recent survey of some of the UK’s wealthier private investors, 41% stated that they would be prepared to invest in Small and Medium Enterprises (SMEs). Two thirds of such investors also feel confident that UK SMEs can deliver attractive levels of growth.

However, frustratingly, they  do not know the best way to go about making such investments. This potentially equates to in excess of £100bn in unexploited funding for these economic powerhouses.

 

Enterprise Investment Scheme (EIS) and Seed EIS

Over half of these potential investors are looking at opportunities through the Enterprise Investment Scheme (EIS) for 2016/17 and around a quarter were looking at Seed EIS investments (SEIS) either in addition to, or instead of, EIS.

An investment which is structured such that it qualifies for one, other or both of these reliefs will allow the investor to avail him or herself of attractive tax benefits.

Further information on the EIS scheme can be found here.

Further information on the Seed EIS scheme can be found here.

 

Budget 2016 – Tax relief for Entrepreneurial Investors

The recent 2016 Budget focused heavily on SMEs and provided them with some interesting tax reliefs. This included the reduction in the headline rate of corporation tax to 17% from 2020 onwards.

However, it also featured a new relief targeted at Entrepreneurial Investors such as those described above.

This new relief will enable an investor who is not an employee or Director to obtain Entrepreneurs Relief if certain conditions are met. This will mean that such an investor will potentially enjoy greater returns from their investment.

Further information on the scheme for Entrepreneurial Investors can be found here.

 

Summary

It is clear that there is a very positive sentiment towards UK SMEs from private investors. However, much of that potential finance and investment remains unlocked despite attractive tax benefits for doing so. The key is therefore matching that investment with viable SMEs with the potential for growth and locking in any tax benefits which might be available.

That is precisely where Enterprise Investment Centre comes in!

 

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