Enterprise Investment Scheme (EIS)

BWCE’s share offers are no longer eligible for the Enterprise Investment Scheme (EIS).  Information about the last 2 schemes that applied for EIS status are below together with details about how to claim your EIS relief:

Stowey Barn and Old Mill Hotel offer

Latest News – 17 March 2017

The good news is that the remainder of investors in the Stowey Barn Solar and Old Mill Hotel offer that have a start date of the 17 or 28 November 2016 have had their investment approved by HMRC and the appropriate blank EIS 3 certificates have reached HQ and are being filled (by hand) and sent out over the next few weeks.

Tax relief can be claimed in the 2015/16 tax year the shares were issued, or can be carried back to a previous tax year. For further details contact your financial advisor or visit the HMRC website.

When to claim EIS reliefThe EIS position on the Stowey solar and Old Mill Hotel Hydro share offer was more complicated than earlier applications.

One of the unfortunate consequences of the sudden removal of the EIS status from the community-owned renewable energy sector was the effect on the EIS Advance Approval process. Previously it was possible to apply to HMRC outlining a proposed project and then get a letter from HMRC confirming that, if the project continued to run along the lines outlined, it would qualify for EIS relief (see Wilmington below). The project would then apply to HMRC, after it had been trading for four months, for permission to send out EIS certificates to investors.

As mentioned above approval has now been granted and all the those eligible for EIS have received or will receive shortly their certificates. How to apply for the relief is detailed below but is for information only – if in any doubt contact your advisor or the HMRC helpline 0300 200 3319.

Wilmington share offer

BWCE have been given pre approval by HMRC that shares purchased in the Wilmington Farm Solar Array offer will be eligible for the Enterprise Investment Scheme (EIS). This means that qualifying UK taxpayers can claim 30% of their investment back, up to a maximum of the amount of tax that they have paid. So, for example, a person investing £10,000 who has a personal tax bill at the end of the year of say £5,000 would be able to claim back £3,000.

The EIS certificates have been sent to eligible investors.

How to Claim EIS Relief

Once HMRC have authorised the tax submissions made by BWCE we will be permitted to distribute to all qualifying investors a Form EIS 3 which sets out the amount invested and states that the investment is eligible for tax relief.

For Investors who Normally Complete a Tax Return Form

You need to claim the relief on your Tax Return form by completing the Additional Information Section. In Box No 2 on Page 2 you need to enter the total value of the investment upon which you are claiming relief. In the large box on Page 4 of the Additional Information Section you need to provide details of the name of the company invested in , the amount invested, the date of issue of the shares and the name and reference number of the HMRC office issuing the tax certificate. All this information can be found on the EIS certificate we will issue.

You do not need to send the EIS Certificate to HMRC but you do need to retain it in a safe place. HMRC may request to see the certificate as evidence in support of your claim.

The tax relief will normally be allowed in the year in which the shares were issued to you. If you wish to claim relief against the previous tax year you can either amend the Tax Return previously submitted for the earlier year, or fill out Page 3 and 4 of the EIS form as detailed below and send it to your HMRC office.

For Investors who do not Normally Complete a Tax Return Form

If you are employed under PAYE or retired and do not normally complete a Tax Return form, the procedure for claiming relief against tax deducted from you is slightly different. You need to complete the blank sections on Pages 3 and 4 of the EIS Certificate. The details you need about the date of issue and the HMRC office reference number can be found on Page 1 of the certificate.

Detach Pages 3 and 4 of the EIS certificate and send it to the HMRC office that deals with your tax deductions. If you are employed or have a pension from a former employer you will be able to find details of the HMRC office dealing with your affairs from your employer. If you cannot find this information you will need to telephone HMRC on 0300 2003300.

The tax relief will normally be allowed the year in which the shares were issued to you. There is a space on Page 3 of the form to specify if you wish to claim the relief against the preceding tax year.

More Detailed Information

Under the terms of the Enterprise Investment Scheme there are two main conditions to be satisfied before members can claim income tax relief:

1) The company has to be accepted by HMRC as a qualifying company

We have already obtained conditional approval from HMRC before commencing the share offer. This involved explaining the structure of the company, its intentions and its proposals for making a share issue. After the company has been trading for at least four months the company will send a Form EIS1 to HMRC reporting that its conditions have been complied with and providing details of the shareholders who have subscribed for shares in the company. Once HMRC are satisfied they will authorise the company to issue Form EIS3 to each shareholder. These forms are, essentially certificates confirming the amount invested in an EIS qualifying company.

2) The member needs to demonstrate to HMRC that they are a ‘qualifying individual’

In general terms this means that the member is an individual registered for tax in the UK. If the member is in the habit of completing an Income Tax Return there is a specific section on the form to enter details of EIS relief to be claimed. If the member does not normally complete a tax return, it will be necessary to request that you complete one. It is not normally necessary to send the form EIS3 off to HMRC but it should be kept in a safe place in case HMRC request evidence of the investment.

Tax Relief Available:

  1. Income Tax relief is available at 30% of the sum invested. The tax can be reclaimed against tax paid in the tax year the shares were issued or the previous tax year. The tax relief is restricted to the amount of tax the tax payer has paid in the relevant years. If you have paid little or no tax you will receive little or no tax relief.
  1. Once the shares have been held for at least two years they are designated as ‘business property’ for the purposes of Inheritance Tax. This means that they are 100% exempt from IHT.
  1. Capital Gains Tax Deferral. If a taxpayer has a capital gains tax liability taxable gain can be deferred by reinvesting an equivalent sum in these shares. In effect, the liability is deferred until the shares are cashed in.

 

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