EIS Capital Gains + Income Tax Savings End of Year Tax Planning
Financial Planning, Inheritance Tax Planning, Investments, Tax Planning
Just this week we had a great result for clients who had recently sold business premises and moved into a new purpose built warehouse in Coleraine. They face a capital gains tax bill of just over £47,000 which is payable in January 2015. Both Mr and Mrs have substantial income tax bills and are fortunate to have a large investment portfolio and too much money in the bank – they told me in January that they “have too much money” and wanted to begin some inheritance tax and estate planning. As seasoned and experienced investors the couple were ideal candidates for an Enterprise Investment Scheme (EIS). By investing approximately £170,000 into an EIS they can hold over their capital gain i.e. they don’t have to pay it while they hold the EIS investment. They must hold the EIS for five years and once they have held it for two years the amount invested is outside of their estate for inheritance tax purposes so long as the EIS is held at point of death. If the EIS is still held at point of death the Capital Gains Tax liability is eliminated. As a bonus they also get an income tax refund of 30% of the amount invested into the EIS. Any growth within the EIS investment is tax free.
These investments are not suitable for anyone but if you would like to find out more about EIS or VCT (Venture Capital Trust) please do get in touch.
By David Gibson