This is an exciting time for EIS growth investing – 45 new businesses are born in this country every hour. The UK now launches as many new businesses each year as the USA, despite the population of the US being nearly five times greater.
Given the imminent introduction of new legislation, a lot of investors and advisers may be sad that the opportunity has passed to invest in asset-backed businesses through the Enterprise Investment Scheme (EIS). However, it should come as no surprise that the government is not prepared to offer generous tax reliefs to fund lower risk investments. The changes being put through bring clarity and focus to the real objective of EIS, to encourage entrepreneurship and innovation in the UK.
The UK is a great place to start a business and on its way to becoming the entrepreneurial capital of the world. EIS is helping that with almost £16.2 billion raised for 26,355 individual companies since the scheme’s launch in 1993. The UK now leads the OECD nations in terms of the number of employer business births.
EIS in the UK is rightly admired across the world and we are aware that other countries are actively engaging in the process of establishing a framework for tax deductions for seed and venture investments.
Of course, there are risks in investing in entrepreneurial growth companies. These are mitigated by the highly attractive tax benefits of EIS, including generous loss relief which can be claimed as an income tax deduction.
The potential returns of investing in exciting new businesses can be attractive and even more so on an after tax basis. There are IHT and CGT benefits too.
Advisers will need to choose their EIS managers with care – looking for those with a track record in growth investing over those who built their reputation elsewhere.
With the support of the right EIS investment specialists, this is an exciting area of the market to be in and an exciting time to be investing.
John Glencross
CEO – Calculus Capital
Calculus are pioneers of the EIS industry, having launched the UK’s first approved EIS fund in 1999. Last year was a record year for the firm – the team reviewed over 500 companies, identifying 15 suitable opportunities, in which we were able to invest a total of £30 million.
Great current investment stories
- Every1Mobile: A Brighton based, Africa focused, marketing services company. Clients include multi-nationals, NGOs and government departments
- Axol Bioscience: A Cambridge based supplier of cell lines for research purposes to pharma companies and research organisations
- Cornerstone: An innovative e-commerce men’s toiletries supplier
- Blu Wireless Technology: A 5G wireless chip designer, helping the roll out of ‘smart’ cities
