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Rakhi Vasavada
Rakhi Vasavada, Financial and Legal Consultant
Category: Finance
Satisfied Customers: 4433
Experience:  Graduated in law with Emphasis on Finance and have have been working in financial sector for over 12 Years
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Hi, is there any Tax relief if a Company invests in shares

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Hi, is there any Tax relief if a Company invests in shares or lends another small Company money? One of my clients believes that there is some sort of tax break, but I have not heard of this. If there is such a thing- what conditions would have to be met? Thanks, CAS
Dear Friend,

Hello and welcome. Thank you for providing an opportunity to assist you.

Yes, your friend is primarily correct. There are such schemes. Let me throw some more light on this.

Investors can now choose from a growing crop of successful UK start-ups, with the government now offering three schemes that focus on tax breaks for business investors to help plough funding into unlisted firms.

The schemes seem to be doing a good job of forging the missing link between philanthropy and competitive returns - because while many angels invest for reasons that are not purely financial, their overall goal is still profitability.
The big win for investors is that the tax-friendly elements essentially give them a buffer against losing money. Tax relief of 40 per cent on a qualifying investment means you can afford to lose a sizable chunk before what you put in gets hit.

Essentially, the Enterprise Investment Scheme (EIS), the Seed Enterprise Investment Scheme (SEIS) and Venture Capital Trusts (VCT) were all established to provide the right tax incentives to encourage wealthy people to invest in high risk enterprises.


Refer the following links for further details.

http://www.hmrc.gov.uk/eis/

http://www.hmrc.gov.uk/seedeis/

http://www.hmrc.gov.uk/guidance/vct.htm

I am sure this would help.

You may please leave a positive rating if this helps as this ist the only way we get compensated for assisting you. Alternatively please feel free to reply back if you need further assistance.

Warm Regards
Customer: replied 2 years ago.

Thank you for your helpful guiding answer. Quite a bit of reading to do to educate myself! At the moment I have this situation: my client company which is trading has transferred £8k into another company (B), which has been dormant. Currently the officers of both companies are different, although one of the directors of my client company is considering becoming a director of company B. The hope is that in some way they can meet the requirements to get the Tax relief... Thanks, CAS

Dear Rona,

Hello and welcome again. Thank you for your follow up reply.

To begin with, if you have transferred this money as a loan, it will not qualify for any scheme.

However, having said this, what I suggest that younger shares allotted against that transferred money. This is one of the way you can qualify for the relief.

Refer the following for details.

http://www.hmrc.gov.uk/eis/part1/1-1.htm

I am sure this would help.

You may please leave a positive rating if this helps as this ist the only way we get compensated for assisting you. Alternatively please feel free to reply back if you need further assistance.

Warm Regards
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