New research reveals that advisers prefer EIS to VCT

A brand new survey by tax environment friendly funding supervisor means that monetary advisers utilise Enterprise Funding Scheme (“EIS”) funding alternatives greater than Enterprise Capital Trusts (“VCTs”) .

When requested whether or not they have a tendency to make use of EIS funds or VCTs extra typically, one in ten advised they solely use EIS. That is in comparison with simply 2% of respondents who use VCTs solely.

Almost a 3rd use each EIS and VCT equally, with an additional 26% stating that they use EIS ‘predominantly,’ however do additionally utilise VCTs when acceptable.

82% of advisers additionally state that pace of deployment is a ‘essential’ issue when choosing an EIS supervisor, with the opposite 18% suggesting that this be a ‘pretty essential’ criterion.

The EIS is a Authorities scheme that gives a spread of tax reliefs for traders who subscribe for qualifying shares in qualifying firms, together with revenue tax reduction, capital good points tax deferral, CGT-free progress, inheritance tax mitigation and share loss reduction.

VCTs are much like funding trusts and are managed by fund managers, with traders subscribing for shares in a VCT, which then onward invests in qualifying buying and selling firms, with tax reliefs together with revenue tax reduction, CGT-free progress and tax free dividends.

Andrew Aldridge, Accomplice at Deepbridge Capital and Board Member of The Enterprise Funding Scheme Affiliation (EISA), commented: “Given final 12 months’s report fundraising by VCTs, you’d be forgiven for considering that they’re the first tax environment friendly funding planning instrument utilized by monetary advisers, however this survey suggests in any other case.

“It’s reassuring to know that the Enterprise Funding Scheme continues to be a key instrument for advisers when tax planning and in search of long-term progress alternatives. Given the present macroeconomic local weather, EIS has by no means been extra essential for traders, advisers and, critically, the growth-focused early-stage firms for whom EIS funding is invaluable.”

Kam Pooni, CEO at Glyconics, which has acquired EIS funding added; “The Enterprise Funding Scheme is globally envied, and supplies UK primarily based innovators with important funding that may be transformational. This has been the case for us at Glyconics as we search to revolutionise the medical diagnostics and biomarker evaluation industries, by taking our spectacular R&D outcomes into the business enviornment.”

Michael White, Managing Director at Capital Wealth Companions, concluded; “Each EIS and VCTs present monetary advisers with improbable tax planning instruments, while additionally encouraging traders to again early-stage unlisted shares, which might present vital long-term progress. Inside a diversified and balanced portfolio, all monetary advisers must be contemplating EIS investments for acceptable purchasers.”

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