Do Entrepreneurs Understand EIS?

The Enterprise Investment Scheme (EIS) is a Government scheme established in 1994 to provide a range of tax reliefs for investors who subscribe for qualifying shares in eligible companies.

The purpose of EIS is to stimulate growth and encourage investment. However, EIS is reportedly a relatively unknown quantity for many UK entrepreneurs.

According to a study of 1,000 entrepreneurs by E2Exchange, a reported 25% of business people claim they have never heard of EIS. Furthermore, 35% are unaware of EIS’s tax relief benefits. UK entrepreneurs and investors are unquestionably unclear regarding EIS, with an astonishing 90% of business people having on no occasion used EIS as a business or as an investor.

EIS was designed to aid smaller and medium size enterprises in the UK to raise finance by offering a spectrum of tax reliefs to potential investors. As 99% of companies in the UK are in the SME sector, and thus many qualify for EIS, it is astounding that EIS, a hugely valuable incentive, lacks any true understanding and usage by both investors and companies. The benefits of EIS include up to 30% tax relief, no Capital Gains Tax on the shares, IHT relief, deferral relief and loss relief. Many business people ascribe their lack of knowledge regarding EIS to the fact that neither their financial advisors nor their banks have mentioned the scheme.

At Ducalian Capital we believe that business owners are not merely unaware of the benefits of EIS but are not conscious of how to develop partnerships with investment firms in order to raise funds via EIS. We regard developing partnerships as a positive way for businesses to overcome the regulatory burden associated with capital raising. Nowhere has this been better illustrated than in our current partnership with Engage to deliver the Titan brand of storage businesses.

Ducalian feels it is vital that EIS is widely understood and acknowledged within the real estate sector, for EIS stands as a crucial mechanism to fuel the UK economy. EIS has enabled us to stimulate jobs with over 25 different businesses working together to deliver each of our Titan branded storage companies. The Enterprise Investment Scheme truly works when understood and used effectively.

Please take note of the risk warnings in relation to EIS investments listed on our website.