Sometimes at work, your company may offer you the opportunity for an EIS investment. Along with the fact that it is a nice way to invest and make future funds for yourself, an Enterprise Investment Scheme is also recognized by the government as a positive form of investment and therefore qualifies you for tax relief, so it is a win-win situation all the way around. Due to the tax relief law; you can receive up to twenty percent of tax relief on your normal income tax provided whatever shares you claimed on your tax relief have been held for up to three years.
Most of the time, the income tax reduction from EIS tax relief is taken out of the amount of taxes that face garnishment on your payroll checking. Therefore, you continually feel the real effects of the EIS tax relief every time you cash a paycheck. It is also taken into account on your income tax bill and therefore anybody with a calculator can see how much it can benefit them. The company who is paying you will also experience EIS tax relief because they are usually also invested in the same stocks you hold as an employee. Many businesses use several strategies to encourage their employees to enroll in investments because they also will benefit from the tax relief on their final income tax bill as well. Therefore, both sides are happily satisfied so long as they fill out the appropriate government forms.
One nice thing about EIS tax relief is that if the shares of the investment are held for 3 years or longer, the owner does not have to pay any capital gains taxes when they decide to withdraw their funds, even if they did gain money off the investment. If the investment depreciates in value, there is also additional tax relief that the company or individual can claim on that year's income tax forms. Plus, if the shareholder dies after owning the shares for two years, they have complete tax relief against inheritance tax and the inheritor does not have to pay IHT for the property.
All of the above reasons are great reasons to remember to claim EIS tax relief if you decide to make an EIS investment. The key to getting the best EIS tax relief is to remember you must hold any shares you purchase for over three years.
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