Moray Wright writes in Professional Adviser on the growing EIS case for the right investors. Read the full article here.
For years, investors have been able to think about pensions as both saving for retirement and efficient estate planning for the future. From 6 April 2027, that calculation changes.
Most unused pension funds will be brought into scope for inheritance tax (IHT), a shift that will alter how many investors think about pensions, and the transfer of wealth across generations.
The changes will not mean that pensions suddenly become unattractive. Far from it. They remain one of the most powerful long-term savings structures available. But it does mean that the role pensions play in intergenerational planning is changing. And when the role of one wrapper changes, attention should naturally turn to others.
That is where the Enterprise Investment Scheme (EIS) enters the conversation with new prominence.
This coming April, the amount of EIS funding companies can raise under the initiative will significantly increase. Annual company limits will rise to £10m, or £20m for knowledge-intensive companies, while lifetime limits grow to £24m and £40m, respectively. Effectively doubling the limits will help scaling businesses secure follow-on capital for growth. Critically, it also broadens the investment case for clients and advisers. EIS can now increasingly be seen not only to access early-stage businesses, but as a route into a pipeline of scaling, innovation-led UK companies.
Unlike pensions, the tax features for EIS remain unchanged. The scheme will continue to offer up to 30% income tax relief for qualifying investments, and realised growth can be free of capital gains tax (CGT) if the relevant conditions are met. Separately, shares in EIS companies can qualify for up to 100% Business Relief if held for more than two years, which is why EIS can now play an important role in inheritance tax planning.
To read the full article on Professional Adviser, click here.