Offering Investors exposure to Small to Medium Sized Growth Companies

Sentinel EIS specialist approach to portfolio investments is on the merit of each company, with independent specialist due diligence and bespoke monitoring/reporting systems and processes.

We leverage Citicourt’s vast experience in corporate finance and substantial deal flow of good mature EIS qualifying companies.

The team mobilises decades of experience getting to the core of companies to help ensure they are sound investments, and to advise them towards successful exits.

We know companies and get excellent deal flow through our corporate finance relationships. We scrutinise companies. We bring this expertise to EIS investments for companies in which we see potential, and for our investors.

Apply to Sentinel EIS

Inheritance Tax Relief – ‘IHT’ Relief

Shares in EIS qualifying companies will generally qualify for Business Property Relief for Inheritance Tax purposes at rates of up to 100% after two years of holding such investment, so that any liability for Inheritance Tax is reduced or eliminated in respect of such shares.  

CGT Freedom

No Capital Gains Tax is payable on the disposal of shares after three years, or three years after commencement of trade, if later, provided the EIS initial income tax relief was given and not withdrawn on those shares.  However, the shares can be held for much longer, thus potentially permitting CGT free gain to accrue over a longer period.  The opportunity for a CGT free gain can be an extremely valuable benefit from subscribing for shares in a successful EIS qualifying company.

Loss Relief

If EIS shares are disposed of at any time at a loss (after taking into account income tax relief), such loss can be set against the investor’s capital gains, or his income in the year of disposal or the previous year.
For losses offset against income, the net effect is to limit the investment exposure to 38.5p in the £1 for a 45% tax payer, if the shares were to become totally worthless.
Alternatively the losses can  be offset against Capital Gains at the prevailing rate 28% as applicable.

CGT Deferral Relief

Tax on  capital gains realised on a different asset can be deferred for as long as the EIS qualifying shares are held or even indefinitely, where disposal of that asset was less than 36 months before the date of the issue of shares in the EIS investment or less than 12 months after it.
Deferral relief is unlimited, in other words, this relief is not limited to investments of £1m per annum and can also be claimed by investors (individuals or trustees) whose interest in the company exceeds 30%.

Income Tax Relief

An individual with no more than a 30% interest in the company can reduce their income tax liability by up to 30% of the amount invested. An EIS qualifying investment must be held for no less than three years from the date of issue, or until three years from commencement of trade, if later.
There is no minimum subscription per company and the maximum in respect of which a subscriber may obtain income tax relief in any year is £1m.
Individuals may elect to treat their subscription for EIS shares, up to their maximum annual allowance, as if made in the previous tax year, thereby effectively carrying income tax relief back one year.   In other words, up to £2m may be invested of which £1m could be applied to the previous tax year.
Individuals each have an EIS allowance of £1m, so a married couple could invest up to £2m per tax year.
Income Tax Relief is limited to the amount which reduces the individual’s income tax liability for the year to nil.

Procedure for claiming EIS Tax Relief

To claim relief the investor must have an EIS3 Form from the company invested in.  The investor then has to fill in and submit a self-assessment income tax return for the appropriate tax year to HMRC showing the EIS investment.  The EIS3 form needs to be submitted with the return if the investor is also claiming CGT deferral relief.    The claim may lead to a rebate of tax.  If the investor is making the claim for the current tax year, then before they submit the return they can write to ask HMRC to adjust their PAYE code (or their payments on account if they are self employed).   It is advisable to speak to an accountant or other professional with regard to the tax year for which relief should be claimed.  There is also information on the HMRC website under EIS Investing.

Reference: EISA

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