Enterprise Investment Scheme (EIS) relief was introduced to encourage investment in smaller, private British businesses. To support this, several tax incentives are available, making EIS an attractive option for investors.

What tax reliefs are available?

The Enterprise Investment Scheme relief offers several tax advantages, including:

Income Tax Relief

The main benefit is a 30% income tax reducer. This can be claimed in the year of investment or carried back to the previous tax year. However, EIS relief cannot be carried forward.

The maximum investment that qualifies for tax relief is £1 million per tax year.

Capital Gains Tax (CGT) Exemption

If EIS shares are held for at least three years before being sold, any gains made on them are free from CGT. However, income tax relief must have been claimed on these shares, and the relief must not have been withdrawn.

CGT Deferral Relief

Capital gains made on other assets can be deferred if the proceeds are reinvested into EIS shares. This applies if the investment was made within one year before disposal or up to three years after.

For sales made after 30 October 2024, the CGT rate on these deferred gains will be:

• 24% for higher-rate taxpayers
• 18% for basic-rate taxpayers

EIS Loss Relief

If EIS shares result in a loss, investors can offset this loss against their income tax instead of CGT. The loss relief is calculated after deducting any previously claimed 30% income tax reducer.

Inheritance Tax (IHT) Relief

EIS shares held for at least two years at the time of death can qualify for 100% relief from Inheritance Tax (IHT) up to 5 April 2026. After this date, up to £1 million will still qualify for 100% relief, with the excess benefiting from 50% relief—resulting in an effective IHT rate of 20%.

Seeking professional advice on EIS relief

While Enterprise Investment Scheme relief offers valuable tax benefits, there are specific conditions that must be met to claim these reliefs. If you are considering investing in EIS shares or have already done so, our tax specialists can help ensure you maximise the available reliefs.

We provide expert tax advice, ensuring that you navigate EIS relief effectively. Please get in touch to discuss how we can assist you.

Please note: This blog only considers the tax implications of EIS investments and does not constitute investment advice.

The Government announced in the Budget that late payment interest charges will increase from 6th April 2025. Currently, HMRC applies an interest charge of 2.5% above the base rate on outstanding tax liabilities. This will rise by 1.5%, bringing the new rate to 8.75%, up from 7.25%.

With late payment interest increasing, taxpayers should ensure they meet their deadlines to avoid unnecessary costs.

The Impact of Late Payment Interest

Late payment interest can accumulate quickly, resulting in significant additional costs. A common reason for late tax payments is that taxpayers are unaware of their liability, often because they leave their tax return until the last minute.

If you are unsure how much tax you will need to pay in January, it is best to complete your tax return early. This gives you time to plan and arrange payments, avoiding unexpected financial strain.

Reducing Payments on Account – Proceed with Caution

Some taxpayers choose to reduce their payments on account to lower their immediate outgoings. However, if these payments are reduced too much, late payment interest charges will apply. Careful planning is essential to avoid unexpected interest costs.

Executors and Inheritance Tax

Executors handling estates should also be mindful of late payment interest. Those paying inheritance tax via instalments can be exposed to additional charges. Where possible, clearing tax liabilities quickly can help minimise costs. Instalment payments should only be used when absolutely necessary.

Should You Consider a Loan to Cover Tax Payments?

In some cases, taking out a short-term loan to cover a tax payment may be worth considering. If the interest rate on the loan is significantly lower than HMRC’s late payment interest, this could be a more cost-effective option.

How We Can Help

With tax rates already high, avoiding unnecessary interest charges is crucial. Our expert tax team can help you manage your tax liabilities efficiently, ensuring you meet deadlines and minimise costs.

If you have any questions or need assistance with your tax payments, speak to a member of our tax team today.

As the 2023/24 tax return deadline of 31 January 2025 approaches, it’s crucial to act promptly to avoid penalties. Whether you’re filing a personal, partnership, or trust return, ensuring your tax affairs are in order is essential. Here’s what you need to know and how we can help.

Understanding the Tax Return Deadline

The electronic submission deadline for all 2023/24 self-assessment returns is 31 January 2025. This applies if you’ve received a notice to file more than three months ago. Missing this deadline will result in a £100 late filing penalty, with further penalties accruing if the delay continues beyond three months.

In addition to filing, any tax owed must also be paid by 31 January 2025. Late payments will incur interest at 8.75% starting from 6 April 2025, so prompt action can save you money and stress.

Why Early Preparation Matters

Filing your tax return can be a complex process, and preparing a complete and accurate submission takes time. By providing your financial information to us early, you’ll allow us to ensure everything is in order before the tax return deadline. This reduces the risk of errors and gives you peace of mind.

If you’ve received a notice to file but are unsure whether you need to complete a return, we can help. Notices to file can be cancelled if the criteria for submission are not met, but this needs to be resolved promptly to avoid unnecessary complications.

Our Tax Director, Tom Foster, provides a bite-sized summary of the key tax points from the UK Budget 2024. This latest budget introduces impactful tax changes that could affect both individuals and businesses. Here, Tom breaks down the essentials, giving you a clear overview of what’s changing and when. As a firm of Chartered Accountants and Tax Advisers based on the South Coast, we’re here to help you navigate these updates with ease and confidence.

Changes Effective Tomorrow

Increase in SDLT Surcharge
Starting tomorrow, the Stamp Duty Land Tax (SDLT) surcharge on additional property purchases will increase from 3% to 5%. This update affects individuals looking to buy second homes or investment properties and highlights the government’s efforts to moderate property investment.

When it comes to giving tax advice, I prefer to deal with knowns and certainties. Advising action based purely on rumours or potential changes can lead to unnecessary tax liabilities. That said, it’s crucial to align your tax planning with your intentions. For instance, if you weren’t already planning on selling, gifting, or investing, there’s often no sense in making hasty decisions purely out of fear of the unknown.

Changes Effective from April 2025