The Lemon Fool

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. ).Thank you, Raja

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.

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.