Enterprise Investment Scheme
Personal equity investment in qualifying trading companies allows the investor income tax relief at 20 per cent of the amount invested and capital gains tax benefits on the eventual sale. The conditions for relief are complex and restrictive, including a requirement to hold shares for five years. For the tax year 2000/2001 the maximum subscription is ₤150,000. EIS can be combined with reinvestment relief.

Easyform Glossary of Law Terms. — UK law terms.


Enterprise Investment Scheme
(EIS)
A business expansion scheme introduced to encourage equity investment in new and small companies. The EIS has been available for investments since 1994. Taxpayers can benefit from unlimited deferral relief from capital gains tax where gains (including gains on shares) are reinvested in newly issued eligible shares (section 150C and Schedule 5B, Taxation of Chargeable Gains Act 1992). The investment in eligible shares must occur within the period beginning one year before and ending three years after a gain is realised. The gain is then postponed and becomes chargeable only on the occurrence of one of several specified events, for example, on the disposal of the EIS shares or the shares ceasing to be eligible EIS shares. Taxpayers are also entitled to relief from income tax on investment in EIS shares. The income tax deduction is given at the rate of 20% on the amount invested, up to a maximum annual investment of £400,000, provided that the shares are held for at least 3 years. Broadly, a company's shares will be eligible for the EIS if it is an unquoted trading company with gross assets (including subsidiaries' gross assets) not exceeding £7 million, and its trade (or a substantial part of its trade) does not consist of one or more excluded activities. These include dealing in land, banking, financial services, leasing, and legal and accountancy services (section 297(2), Income and Corporation Taxes Act 1988 for periods before 2007-2008 and section 192, Income Tax Act 2007 thereafter).

Practical Law Dictionary. Glossary of UK, US and international legal terms. . 2010.

Look at other dictionaries:

  • Enterprise Investment Scheme — A tax subsidy to encourage investment in small risky companies. Where a company qualifies for the scheme, any investment in equity shares in the company qualifies for income tax relief at a rate of 20%, up to a maximum investment of £150,000 in… …   Financial and business terms

  • Enterprise Investment Scheme — The Enterprise Investment Scheme (EIS) is a series of tax reliefs designed to encourage investments in small unquoted companies carrying on a qualifying trade in the United Kingdom.PurposeInvestment in companies that are not listed on a stock… …   Wikipedia

  • Enterprise Investment Scheme — EIS An investment scheme in the UK that replaced the Business Expansion Scheme (BES) on 1 January 1994. Its purpose is to help certain types of small higher risk unlisted trading companies to raise capital. Individuals who invest between £500 and …   Big dictionary of business and management

  • enterprise investment scheme — EIS An investment scheme in the UK that replaced the business expansion scheme (BES) on 1 January 1994. Its purpose is to help certain types of small higher risk unlisted trading companies to raise capital. Investors in eligible shares are… …   Accounting dictionary

  • Enterprise Investment Scheme — /ˌentəpraɪz ɪn vestmənt ski:m/ noun a scheme which provides income and CGT relief for people prepared to risk investing in a single unquoted or AIM listed trading company. Abbreviation EIS …   Dictionary of banking and finance

  • scheme — [skiːm] noun [countable] 1. an official plan or arrangement that is intended to help people in some way: • a government training scheme for the unemployed 2. FINANCE an arrangement in which the government or an employer provides financial help to …   Financial and business terms

  • Investment — or investing [British and American English, respectively.] is a term with several closely related meanings in business management, finance and economics, related to saving or deferring consumption.Investment is the choice by the individual to… …   Wikipedia

  • investment — in·vest·ment 1 n: investiture (1) investment 2 n 1: the outlay of money usu. for income or profit: capital outlay; also: the sum invested or the property purchased 2: the commitment of funds with a view to minimizing risk and safeguarding capital …   Law dictionary

  • investment — An expenditure to acquire property or other assets in order to produce revenue; the asset so acquired. The placing of capital or laying out of money in a way intended to secure income or profit from its employment. Securities & Exchange… …   Black's law dictionary

  • investment — An expenditure to acquire property or other assets in order to produce revenue; the asset so acquired. The placing of capital or laying out of money in a way intended to secure income or profit from its employment. Securities & Exchange… …   Black's law dictionary

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”