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A brand new survey by tax environment friendly funding manager means that monetary advisers utilise Enterprise Investment Scheme (“EIS”) funding alternatives greater than Venture Capital Trusts (“VCTs”) .
When requested whether or not they have a tendency to make use of EIS funds or VCTs extra typically, one in ten recommended they solely use EIS. This is in comparison with simply 2% of respondents who use VCTs solely.
Nearly a 3rd use each EIS and VCT equally, with an extra 26% stating that they use EIS ‘predominantly,’ however do additionally utilise VCTs when acceptable.
82% of advisers additionally state that velocity of deployment is a ‘essential’ issue when deciding on an EIS manager, with the opposite 18% suggesting that this be a ‘pretty vital’ criterion.
The EIS is a Government scheme that gives a spread of tax reliefs for buyers who subscribe for qualifying shares in qualifying firms, together with earnings tax reduction, capital features tax deferral, CGT-free development, inheritance tax mitigation and share loss reduction.
VCTs are much like funding trusts and are managed by fund managers, with buyers subscribing for shares in a VCT, which then onward invests in qualifying buying and selling firms, with tax reliefs together with earnings tax reduction, CGT-free development and tax free dividends.
Andrew Aldridge, Partner at Deepbridge Capital and Board Member of The Enterprise Investment Scheme Association (EISA), commented: “Given final 12 months’s file fundraising by VCTs, you’ll be forgiven for pondering that they’re the first tax environment friendly funding planning software utilized by monetary advisers, however this survey suggests in any other case.
“It is reassuring to know that the Enterprise Investment Scheme continues to be a key software for advisers when tax planning and searching for long-term development alternatives. Given the present macroeconomic local weather, EIS has by no means been extra vital for buyers, advisers and, critically, the growth-focused early-stage firms for whom EIS funding is invaluable.”
Kam Pooni, CEO at Glyconics, which has obtained EIS funding added; “The Enterprise Investment Scheme is globally envied, and gives UK primarily based innovators with important funding that may be transformational. This has been the case for us at Glyconics as we search to revolutionise the medical diagnostics and biomarker evaluation industries, by taking our spectacular R&D outcomes into the industrial area.”
Michael White, Managing Director at Capital Wealth Partners, concluded; “Both EIS and VCTs present monetary advisers with incredible tax planning instruments, while additionally encouraging buyers to again early-stage unlisted shares, which might present important long-term development. Within a diversified and balanced portfolio, all monetary advisers needs to be contemplating EIS investments for acceptable purchasers.”
