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VCT vs EIS - income tax relief clarification

Sophisticated and complex high-risk tax-sensitive investments in small companies: handle with care
Artistxman
Posts: 6
Joined: September 22nd, 2017, 12:01 pm

VCT vs EIS - income tax relief clarification

#117850

Postby Artistxman » February 13th, 2018, 12:11 pm

Dear all

I made a substantial amount of investment in VCT this tax year as I went over my pension tax relief based on some discussions/reading through this forum. Thanks for all the help of the members and I will post my returns on a yearly basis to help others(I started an excel sheet to keep tag). Now, having received the wealth club newsletter- I am looking at the EIS to see if it's worthwhile to try it at some point- not sure yet if this tax year or the next one. If one invests in EIS, how does the loss relief work against tax- will it be against the normal tax which is deducted against PAYE or does it only apply against CGT? I realise the EIS is more risky as it's against a single company/ investment- however the media one appeared as though its more diversified(hopefully that is not the ones in the news around tax evasion etc. :roll: ).Thank you, Raja

Kidman
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Re: VCT vs EIS - income tax relief clarification

#118121

Postby Kidman » February 14th, 2018, 12:21 pm

Firstly an answer to your question;
the loss relief is against income tax. If your investment totally fails then the unrelieved loss, i.e. the 70% which is the investment net of initial relief, can be claimed for loss relief.
and a few general comments on EIS for you to research further (and to check if I'm right in the first place);
EIS investments only need to be kept three years to avoid clawback of initial relief,
I think EIS investment initial relief can be applied against a previous year's income (carry-back),
look at EIS funds as well as single investments, there are two types of funds, one which gives you a single EIS3 initial relief form and the other which gives you a separate form for each investment that the fund makes, hence there are timing differences.

Artistxman
Posts: 6
Joined: September 22nd, 2017, 12:01 pm

Re: VCT vs EIS - income tax relief clarification

#120253

Postby Artistxman » February 25th, 2018, 9:06 am

Thank you, I have decided against it for now. I will see how my VCTs perform over the next year or so. In the meanwhile decided to use JISA as a better option which is completely different from the discussion in this thread.


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