EIS Funds with Imbiba
There are two principal types of EIS investment, a single company structure and EIS Funds which can be approved or unapproved. But which is best - an approved or unapproved EIS Fund?
An approved EIS Fund is a Fund that has effectively gained EIS clearance prior to the fund launch. This means that the management team is required to invest 90 per cent of funds raised within 12 months of the launch date. By investing in an approved EIS Fund, investors receive income tax relief in the year the investment is made and Capital Gains Tax (CGT) deferral is not available until the manager has made the underlying investments. Unapproved EIS Funds are generally considered to be a more popular option due to the fact that income tax relief is granted each time an underlying investment is made and CGT can be deferred each time an underlying investment is made.
Single company vs. portfolio
EIS Funds offer a spread of investments across a portfolio of separate investment opportunities whilst, as the name suggests, a single company EIS directs money to just one company. In the case of an EIS Fund, our Fund Manager are Enterprise Investment Partners, who are appointed to oversee the Fund and to manage the investment within the portfolio. Upon investment into a qualifying company, the investors' money will be used to fund the purchasing of shares and the fund manager will often perform the shareholder duties. In contrast, a single company EIS is an opportunity to invest money in one company rather than many. This structure is seen as more high-risk as the investor's return is based on the performance of an individual company.
This information is based on our understanding of current taxation law and HM Revenue and Customs Practice, which may change, Please note that the value of tax relief depends on your own financial circumstances. For more information, please get in touch.