With Budget 2024 just around the corner on Tuesday 10th October, it is timely to consider some of the recent changes in EIIS and what changes be nice to see in this year's budget from the point of view of an EIIS investor.
Recent budgets have seen a number of changes:
- Remove the 30%/10% split of the tax relief so the whole 40% can be claimed in the first year. This was a significant simplification.
- The requirement was removed for EIIS investee company to spend 30% of the funds before relief can claimed by the investor.
- The annual investment limit was increased from €150,000 to €250,000 for an investment minimum of four years and to €500,000 for an investment minimum period of seven years.
- EIIS relief can now be claimed via Qualifying Investment Funds that invest in eligible start-ups.
What would be great to see changed with EIIS in Budget 2024?
- Risk to investors could be further reduced by allowing CGT loss relief on EIIS against gains. This is not currently allowed.
- Reduce the minimum investment period to 3 years in line with the UK EIS scheme.
- Allow EIIS tax relief to be claimed against the previous year's income tax in a similar way to pension contributions. This allows for better planning by the investor, who will have a clearer picture of their income tax bill at this point. This will also necessitate being able to claim relief as soon as the investment is made.
- Self-certification by the investee company should be replaced by official approval. This would protect the investor and allow for the above acceleration of claims.
EIIS is a great scheme and should be a win-win for investors and investee companies. With some further adjustments it could be even better.