Royal Assent: how it could affect your investments

In his November Budget, the Chancellor announced a new measure that affects what investments can qualify for EIS and SEIS tax relief. 

It will become effective once the Finance Bill receives Royal Assent. This is expected in the second week of March but could be as early as next week (w/c 26 February). 

As a result, some of the current EIS and SEIS offers may not be available on the same terms or even at all. 

The full impact of the new measure is uncertain. Two facts remain, though:

  1. Current rules are more flexible for many investors
  2. If you invest now and your shares are allotted before Royal Assent, your investment should be subject to current rules.

Experienced investors planning to invest in EIS or SEIS this tax year could be wise to consider acting now. 

To help you make an informed decision, we have listed below the offers that aim to allot before Royal Assent, although this cannot be guaranteed. This is not a personal recommendation to invest: capital is at risk and you could get back less than you invest. Tax rules can change and the value of tax benefits depends on circumstances.

EIS offers aiming to allot before Royal Assent – deadlines subject to change once a date for Royal Assent is set 

 

Planned allotment date

Application deadline

How to apply

Wealth Club featured offerCorn Rising Ltd Shipping EIS 7 March 5 March Read more and apply online »
Wealth Club featured offerGuinness EIS 28 February 23 February Read more and apply online »
Wealth Club featured offerThe Ralph Veterinary Referral Centre EIS 7 March 28 February Read more and apply online »
Downing Pub EIS – Tranche 3 by Royal Assent 23 February (cheques)
1 March (bank transfers)
Read more and apply online »
Earthworm EIS 9 March 6 March (bank transfers only) Read more and apply by post »
Hindsight Media EIS 1 March 26 February Read more and apply by post »
Ingenious Greenlight Media EIS 6 March 2 March Read more and apply online »
Ingenious Infrastructure EIS 6 March 2 March Read more and apply online »
Ingenious Shelley Media EIS 6 March 2 March Read more and apply online »
Seneca Managed Storage Fund 3 5 March 28 February Read more and apply by post »
Titan Storage EIS – Poole 7 March 5 March Read more and apply online »
West London Pub EIS 7 March 5 March Read more and apply online »

Offers marked with our gold “W” are featured offers. Find out more about how we choose.


SEIS offers aiming to allot before Royal Assent 

 

Planned allotment date

Application deadline

How to apply

Wealth Club featured offerAmplify Music 7 March 5 March Read more and apply online »
Wealth Club featured offerGoldfinch SEIS 7 March Very limited capacity – call us before applying Read more and apply online »

New measure for EIS and SEIS investment – what is changing?

The new measure aims to encourage investment in independent, entrepreneurial companies seeking to expand, whilst curtailing tax-motivated investments, where the tax relief provides all or most of the return, with limited risk to the investor. In other words, the government wants investors to take enough risk to justify the tax relief. 

Whilst the intention is commendable, its implementation could create uncertainty. 

After Royal Assent, to attract tax relief each EIS or SEIS company will have to meet a new qualifying condition, the ‘risk-to-capital condition’. In practice, this means being subject to a principles-based test so HMRC can take a ‘reasonable’ view as to whether it is a genuine entrepreneurial company.

As the test is principles-based, at this stage it is unknown how it will work in practice.

EIS or SEIS offering significant risk buffers through asset-backing through asset-backing (e.g. pubs or storage units) or through contracted revenues (e.g. distribution contracts for a film) may conceivably be under greater scrutiny. 

Some EIS and SEIS providers have already announced their funds will not be available after Royal Assent, and will aim to allot shares before it. We understand in some cases the fund investment strategy may change and the funds could become more risky. 

Experienced investors planning to invest in EIS or SEIS this tax year could be wise to consider acting now.