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Tax Incentives in Business Investment

There are a number of tax efficient investment schemes, which offer tax allowances, tax reliefs and incentives. The main ones that are related to business investment are listed below:

Capital Allowances

Some capital expenditure can be written off against business profits or taxable income. Capital Allowances can be used to reduce tax payable if you need to provide certain equipment or assets for you to do your job.

Research and Development (R&D) Tax Credits

If your company pays Corporation Tax and meets qualifying R&D activity, it may qualify for tax relief on qualifying R&D expenditure.

Enterprise Investment Scheme (EIS)

Investors who purchase shares in smaller, higher-risk trading companies may be rewarded with tax reliefs. We assist with review and planning to ensure qualification for EIS from both the company’s and the individual’s position.

Entrepreneurs' Relief

Individuals disposing of a business interest including shares may be able to take advantage of a lower tax rate of 10% Capital Gains Tax.  It is important to ensure that an individual meets the necessary requirements well ahead of making a gift or sale.

Enterprise Management Incentive (EMI)

EMI schemes are basically share options with tax advantages.  They allow companies to recruit and reward key individuals whose contribution is likely to make a difference to the value of a business.  As long as the relevant conditions are satisfied no tax is payable when the options are granted and the employee has the benefit of the security of having a future stake in the business.

How we can help

By understanding the full scope of an individual’s or business’ financial affairs and their ambitions, we are able to advise on the potential of tax allowances, tax reliefs and incentives pertinent to their circumstances.

Our tax teams largely work with entrepreneurial individuals, who may have gained considerable wealth through building up their own business or with reward through investment in employer companies.

For further information, please contact us at Mercer & Hole - click here if you wish to submit an email enquiry to one of our Private Client Partners.

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