bigfoot12
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Post by bigfoot12 on Feb 27, 2017 21:32:25 GMT
Does anyone have any longer term experience of EIS?
It has been a few years since I first invested in EIS companies. These are all small companies rather than funds or structures designed to get the relief and I am concerned that it isn't very good. In too many cases I have lost the EIS relief, or I am concerned that I am about to.
This is true of both success and failures. In one case the insiders were going to restructure the company (which had essentially failed) to get some of the value out of it. This would have lost the EIS status. Fortunately there was a large EIS shareholder who was able to block this and looks looks like we might be okay. The residual value is much less then the initial 30% relief, never mind the loss relief. I think that this might be about to happen in two other companies.
In one 'success' I have lost my EIS relief and will have to pay capital gains even though I won't see much money for more than 3 years. I use quotes because I need better successes than this to pay for the losses.
I did expect losses and whilst I don't like them I did expect to write them off against income tax, but instead I have to pay the initial 30% back - I am not happy.
Have other people had similar experiences, or have I been unlucky?
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amwinv
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Post by amwinv on Nov 11, 2018 15:10:15 GMT
Sorry to dig up an old thread bigfoot12, but I just wondered if you'd mind sharing how you've got on with EIS in the past year and a half since this post? I've just done my first EIS investment, and hoped you had some better outcomes since? Also, the 30%... can anyone clarify a confusion I'm trying to work out? Does that amount (in my case just £900, which is a fair amount for me, but probably peanuts to most people on this board!!!  ) actually come off your tax owed, rather than your taxable income? |
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bigfoot12
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Post by bigfoot12 on Nov 11, 2018 15:33:16 GMT
Sorry to dig up an old thread bigfoot12 , but I just wondered if you'd mind sharing how you've got on with EIS in the past year and a half since this post? I've just done my first EIS investment, and hoped you had some better outcomes since? Also, the 30%... can anyone clarify a confusion I'm trying to work out? Does that amount (in my case just £900, which is a fair amount for me, but probably peanuts to most people on this board!!! ) actually come off your tax owed, rather than your taxable income? Invested in 31 over the last 4 and bit years. 10 are bust (although two of those gave me a few shares in a different company that acquired some IP). Four or five more are likely to collapse soon. Three or four seem to have a chance to make it big, but in all cases they still haven't really shown that they will make sales on the scale needed. The remainder are not without some hope, but they will need to raise more money and I think on average half will struggle. On a portfolio basis I am up a little (but not really enough) before I consider the tax. Tax makes it much better with ~30% discount on the purchase price and some more tax back on the losses. I have done much better on my more recent investments than my earlier ones. Expensive lessons have been learned. If you invested £3,000 in an EIS then you get a tax credit of £900 which will count in lieu of tax to be paid on your tax return. If you have already paid this tax you will get a refund. Your income stays the same so if you earn say £52,000 you will still lose child benefit rather than bringing your income down to £49,000. (Similar if your total investment was £900, except then the tax credit is £270.)
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stevio
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Post by stevio on Nov 11, 2018 19:03:21 GMT
Sorry to dig up an old thread bigfoot12 , but I just wondered if you'd mind sharing how you've got on with EIS in the past year and a half since this post? I've just done my first EIS investment, and hoped you had some better outcomes since? Also, the 30%... can anyone clarify a confusion I'm trying to work out? Does that amount (in my case just £900, which is a fair amount for me, but probably peanuts to most people on this board!!! ) actually come off your tax owed, rather than your taxable income? Invested in 31 over the last 4 and bit years. 10 are bust (although two of those gave me a few shares in a different company that acquired some IP). Four or five more are likely to collapse soon. Three or four seem to have a chance to make it big, but in all cases they still haven't really shown that they will make sales on the scale needed. The remainder are not without some hope, but they will need to raise more money and I think on average half will struggle. On a portfolio basis I am up a little (but not really enough) before I consider the tax. Tax makes it much better with ~30% discount on the purchase price and some more tax back on the losses. I have done much better on my more recent investments than my earlier ones. Expensive lessons have been learned. If you invested £3,000 in an EIS then you get a tax credit of £900 which will count in lieu of tax to be paid on your tax return. If you have already paid this tax you will get a refund. Your income stays the same so if you earn say £52,000 you will still lose child benefit rather than bringing your income down to £49,000. (Similar if your total investment was £900, except then the tax credit is £270.) Thanks bigfoot12Are you able to contrast your EIS investment with any VCT investment?
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amwinv
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Post by amwinv on Nov 12, 2018 1:26:00 GMT
Thanks for the reply bigfoot12. I really appreciate your openness. Also, the fact that it comes off the actual tax owed is amazing. It is a 3K investment so I kinda assumed that was too good to be true, and it'd just come off my taxable earnings (like my regular self employed expenses), so I wouldn't really get the full £900 - it would only be 20% of that really. So yey! £900 of my next tax bill sounds like a total win! But with your current "success" rate, it seems like I'd be ludicrously lucky if my one toe in the water does anything beside nosedive. Hahah!!! |
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bigfoot12
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Post by bigfoot12 on Nov 12, 2018 10:01:06 GMT
Invested in 31 over the last 4 and bit years. 10 are bust (although two of those gave me a few shares in a different company that acquired some IP). Four or five more are likely to collapse soon. Three or four seem to have a chance to make it big, but in all cases they still haven't really shown that they will make sales on the scale needed. The remainder are not without some hope, but they will need to raise more money and I think on average half will struggle. On a portfolio basis I am up a little (but not really enough) before I consider the tax. Tax makes it much better with ~30% discount on the purchase price and some more tax back on the losses. I have done much better on my more recent investments than my earlier ones. Expensive lessons have been learned. If you invested £3,000 in an EIS then you get a tax credit of £900 which will count in lieu of tax to be paid on your tax return. If you have already paid this tax you will get a refund. Your income stays the same so if you earn say £52,000 you will still lose child benefit rather than bringing your income down to £49,000. (Similar if your total investment was £900, except then the tax credit is £270.) Thanks bigfoot12 Are you able to contrast your EIS investment with any VCT investment? I see them as having little in common, except for 30% tax credit. There are loads of websites out there comparing the rules of limits and how long you need to hold etc. The main think I would say is that the rules covering what the VCT can invest in have changed very significantly in the last few years, so I don't expect that there will be many previously successful VCTs that haven't subsequently been impacted by the new rules. There really is little point looking at the history of most of them. Having said that they have behaved like funds with returns much lower in volatility than EIS, as one would expect. I didn't do any of the really clever ones such as some of the solar ones. VCTs take no effort to manage, EISs tend to have much more paperwork and voting and I get nervous when they struggle raise money, and I get nervous when the manage to raise money from a VC!
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) actually come off your tax owed, rather than your taxable income?
