EIS income tax carry back relief

­

Five reasons why 20% income tax relief may be preferable to 30%­

Enterprise Investment Scheme (EIS) investors can take advantage of 'carry back' which allows the cost of shares to be treated as though they had been acquired in the previous tax year, enabling investors to benefit from income tax relief in the preceding year.  But with EIS income tax relief increased to 30% for the 2011/12 tax year why would anyone want to carry back to 2010/11 when only 20% income tax relief was available?

Growth capital investor, Oxford Capital Partners has identified five reasons why investors may choose to carry back EIS investments to 2010/11 and sacrifice 10 per cent income tax relief:

  • Use it or lose it:  Many people assess their previous year’s tax after the end of the tax year and then invest in EIS using carry back to mitigate that tax bill.  Failing to carry back loses out on a valuable tax relief that cannot be regained in the future.  The 30% income tax relief will still be available through carry back the following tax year.
  • One off tax bill in previous year:  People with an unusually high income tax liability in 2010/11, which will not be repeated in 2011/12 can carry back to mitigate the previous year’s bill.
  • Access to tax relief cash earlier:  Under self assessment taxpayers must settle their outstanding tax bill by 31 January of the following year.  Investors carrying back current investments to 2010/11 tax year will benefit from a reduced tax bill in January 2012 rather than having to wait until January 2013.
  • Invest £1 million in EIS in 2011/12:  Investors who had not used their EIS tax relief in 2010/11 can double their investment in 2011/12 from £500,000 to £1 million by carrying back half the investment to 2010/11.
  • Capture CGT deferral:  EIS investors can defer taxation on capital gains incurred up to 36 months before the date the EIS shares were acquired.  Using carry back in 2011/12, investors with CGT liabilities can defer CGT gains right back to 2008/09 tax year.

Ted Mott, Chief Executive, Oxford Capital, says:
“Depending on an individual’s personal tax situation, there are a number of really good reasons why using carry back to gain 20% income tax relief in the 2010/11 tax year is better than benefiting from 30% income tax relief in 2011/12.  However, anyone investing in EIS now, with no outstanding tax liabilities from 2010/11, their best bet is to take the 30% income tax relief in 2011/12 instead.”

-ends-

 

For further information please contact:

Ted Mott, Oxford Capital Partners     01865 860760
Mike Lord, Lord Public Relations       07831 401 311

 

Important Information

Your capital is at risk by investing in the above products and you should not consider an investment if you are not able to bear this risk. EIS tax advantages are only available to UK tax resident investors and legislation is subject to change. Oxford Capital does not give tax advice and if you are in any doubt about aspects of the EIS legislation then please contact a tax advisor.

 

Notes to editors

Founded in 1999 Oxford Capital is a specialist investment manager working on behalf of institutional and private investors.  Its focus is on investing in emerging companies around three super-growth themes of communications, healthcare and sustainability. Its expertise lies in accelerating businesses with potential for high growth into global markets.

Oxford Capital currently oversees a portfolio of around 25 companies, many of which have expanded into international markets in Europe, the US, Latin America, the Middle East and Asia.

The firm manages a range of funds designed for private investors, family offices and institutions to access growth capital opportunities and alternative investments. In the UK, Oxford Capital pioneered the tax efficient Enterprise Investment Scheme (EIS) fund which offers a range of tax advantages to investors.

Oxford Capital has offices in the UK and in Switzerland and manages an international network of partners and advisers to support the development of its portfolio companies.

 

Awards

  • Unquote British Private Equity Awards 2010
    Finalist: Venture House of the Year Award
  • Investor Allstars Awards 2010
    Finalist: Equity Gap Fund of the Year
  • Enterprise Investment Scheme Association Awards 2006.
    Winner: Best EIS Fund Manager
  • Investor Allstars Awards 2006
    Winner: Young Personality of the Year (David Mott)
  • Unquote Private Equity Awards 2005
    Winner: Venture Capital House of the Year

Share this page: