As one of the first under the new Innovative Finance ISA rules, peer-to-peer lending platforms offer their best deals. If you are looking to invest some cash into peer-to-peer lending on a platform like Zopa, then instead of just investing in another savings account, have a look at the current offers being offered for new investors below. For those not aware of these tax-efficient schemes, Investec’s head of innovation has provided us with some information that will hopefully help you decide what investment opportunities are available to you.
What is Enterprise Investment Scheme (EIS)?
The EIS is one of several types of ‘tax-advantaged schemes available to UK investors. These allow an individual (or company) to receive tax relief on their investment, which can be offset against income or corporation tax bills.
EIS shares are offered by companies that are looking for funding for expansion and growth. Claims must be issued at a price lower than the market value (i.e., at a discount).
What is Seed Enterprise Investment Scheme
The Seed Enterprise Investment Scheme (SEIS) is designed to encourage investors in new small businesses.
The SEIS was introduced by the British Government in April 2012 and encouraged people to invest in new companies which can offer them a high rate of return. The money invested by an individual may be exempt from income tax and capital gains tax if specific requirements are met. Now you undefstand well these two Enterprise Investment Scheme and Seed Enterprise Investment Scheme.
To qualify for these exemptions from taxation, the company whose shares are bought must be less than two years old at the time when an investor subscribes for shares, or if it has been dormant for more than one year since it started a business, at the date that its accounts were drawn up. Furthermore, this exemption applies only to investments of no more than £100,000 per year.
The SEIS Investment is set to continue until the end of 2020 and will be reviewed annually. The British government has pledged to give consideration to any proposals that are put forward for its continuance beyond this date.
SEIS offers income tax reliefs to investors who subscribe for new share capital in small early-stage companies whose ordinary shares are provided to employees or directors as part of their remuneration. It also includes capital gains tax relief if certain conditions are met on disposal of those shares within three years subject to maximum comfort at £100,000 per annum (per person).
SEIS is an excellent tax-saving program that gives new companies a big boost along with other growth incentives. It also provides the necessary support towards creating jobs by mobilizing private sector investments into early-stage startups, thereby stimulating economic activity.
