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Enterprise Investment Scheme

Setting up an Enterprise Investment Scheme (EIS).

The Enterprise Investment Scheme (EIS) is a government scheme that provides a range of tax reliefs for investors who subscribe for qualifying shares in qualifying companies.

We can help you set up and administer your EIS Scheme. See the HMRC’s Booklet on EIS Schemes (pdf)

For Shareholders – How to Claim your Tax Back from your EIS  Scheme

Once the business has been trading successfully for several months, shareholders can  apply to recover 30% of tax against their investment. You need to check you are eligible, and if so, send the completed EIS form to your tax office to claim your tax back.

1. Can you claim?  If you earn less than the income tax personal allowance, you may not have paid enough tax to make a claim.  Did you earn over £10,600 (before tax) in the year ended 5th April 2016?  Did you earn over £10,000 in the year ended 5th April 2015?  If the answer is “no” to both questions, then I am afraid you cannot claim.  If the answer is ‘yes’ to either you can claim, so read on. There are two HMRC documents: a certificate to check and keep, and a claim form to complete and send off.

2. Check & Keep the Certificate (pages 1/2).  Check the details on the certificate.  Please keep the certificate safe: HMRC may ask to see it.

3. Complete the Claim Form (page 3/4).  You need to complete each section marked with an ‘X’.

• In the first box enter your ‘Investor Tax Reference’: this is your Unique Taxpayer Reference (UTR) if you complete a personal tax return.  If you don’t have a UTR enter your National Insurance number in the second box instead.

• Section 2, “Claim to EIS Income Tax relief”.  The HMRC prefer to make repayments by increasing your tax code (so you pay less tax in the current tax year).  If instead you want to receive a payment now, don’t tick any box here and ask for this in a covering letter (although HMRC may still decide to increase your personal tax code instead!). Otherwise if you are employed, tick the box to have the funds returned to you by an increase in your PAYE coding. If you do complete a personal tax return and have already submitted the return for 2013/14 tick the next box to say you are claiming relief for a year for which you have already sent in a tax return.

• Amend the section on the right of page 3 if you want to claim relief for last year instead of this year.  This might because your earnings were only above the personal tax threshold in the earlier year. Or it might be because 30% of the value of your investment is more than your tax liability for the current year. Note: this is only likely to be an issue if you have invested a substantial amount but earn little.  There is also a section on EIS deferral relief which applies if you have sold a capital asset in the last tax year which attracts Capital Gains Tax.  Please contact us for advice if this applies to you.

• On page 4, enter your name & sign and date the form.  Check you have completed each box marked with an ‘X’.

4. Send the Form
.  Send the claim form (not the certificate) and covering letter (if you don’t simply want an adjustment in your tax code – see section 3, para 2) to the HMRC. You may wish to take a copy first.  If you complete a personal tax return send the form to your self assessment Tax Office address.

5. Claim via your Tax Return
. Alternatively you can claim via your tax return if you receive one, and haven’t yet submitted it. This will usually be of you rent property or are self employed or a company director.

Look at the ‘Additional Information’ page of the SA101. At box 2 under ‘Other tax reliefs’, enter the investment made and certified in this letter. At the bottom of page four box 21 you need to give more information. For example, enter the following: “EIS Investment of £XX dated 26/02/16 in XXX Ltd Co.

6. Getting Help.  If you need help making your claim, we will be happy to help you.
See the HMRC’s Booklet on EIS Schemes (pdf). You can also get advice on the HMRC’s Tax Information line: 0845 3000 627, from your Accountant or an Independent Financial Advisor. You are also welcome to contact us.

See our Helpsheet on EIS Schemes – (Note: you need to Login or Register to access our Library of Helpsheets)