Making the most of early equity investment opportunities

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By Matthew Cushen

Equity investing in early stage start-up businesses is becoming an increasingly common component of a diversified portfolio.  Part of the attraction of funding start-ups continues to be a highly attractive tax regime that encourages investment into seed enterprises – with generous tax reliefs that mitigate much of the risk of investing in a high-risk asset class.

In their 2017 manifesto, the Tories described two incentives for investors as ‘world leading’: “We will help innovators and start-ups, by encouraging early stage investment and considering further incentives under our world-leading Enterprise Investment Scheme and Seed Enterprise Investment Scheme.” Page 77, Conservative Party 2017 Manifesto.

The Enterprise Investment Scheme (EIS) was set up in 1994 and continued to be supported through Labour governments. It has since been made more attractive by the Conservative government, and has established itself as a part of tax legislation that neither of the main parties would be likely to compromise. The Seed Enterprise Investment Scheme (SEIS), established in 2012, is an extension of EIS and offers even more generous reliefs.

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