Enterprise investment scheme: anyone done this?

big_leon

So I've been looking around and basically I've decided to put some of the money (£5K-£10K) into http://www.seedrs.com/.

They allow you to put money in to fund start-ups. I'm well aware that it's high risk, but it looks extremely interesting.

As for the rest, I'll pay the CAGT!

racing_blue

To take full advantage of the tax credit available requires an investment in excess of one years taxable income. The reason for leverage appears to be to maximise the tax credit while minimising the amount of cash needed up front. Make of that what you will, but there are certainly companies out there promoting schemes like this.

gadgetmind

Companies can promote whatever they like. I would only put money into EIS and VCT that I could afford to never see again. If I've borrowed said money, they I doubt the lender will be quite so accommodating.

grey_gym_sock

yes, the only sensible way to do it is if you can afford the investment becoming worthless. if there's a loan involved, that means you have to be able to pay off the loan from other resources.

racing_blue

Gadgetmind and Greygymsocks, completely agree with you and was simply reporting my limited experience in 2010. Limited mainly by the fact that I quickly decided that I'd sleep easier making a lump payment into a SIPP.

gadgetmind

I've also kept tax in check with SIPP lump sums, but my carry forward is becoming depleted so VCT and/or EIS are on the medium term radar.

Reaper

big_leon wrote: »

So I've been looking around and basically I've decided to put some of the money (£5K-£10K) into http://www.seedrs.com/.

They allow you to put money in to fund start-ups. I'm well aware that it's high risk, but it looks extremely interesting.

It is very high risk. I would only consider investing in an individual startup if I got SEIS tax relief, and as far as I know none of the ones currently on offer do this - but if you are a member perhaps you can confirm this as I can't see all the details.

Reaper

racing_blue wrote: »

Reaper I'd love to hear more about your selection of VCTs. Did you take advice or do your own research? What criteria did you use and what are the results like so far?

I did my own. The first step is decide what kind you want. Planned exit for example. Also what type of investment - AIM, Specialist, Generalist etc.

I decided I wanted an established VCT that was raising additional funds, nothing too exciting. Then it was a case of doing a lot of reading.

In the end I chose the Proven VCT but despite all my selection effort it hasn't done particularly well. Still, it is early days and only recently I saw a financial journalist tipping it so maybe there is hope for it yet.

Fiftyshades

gadgetmind wrote: »

I would *never* use leverage for an investment like this!

Leverage is a 2 edge blade and cuts twice as deep on the way down.

gadgetmind

Reaper wrote: »

I would only consider investing in an individual startup if I got SEIS tax relief, and as far as I know none of the ones currently on offer do this

I know a few small companies that are looking at it but the big problem is that you have to comply with all the EIS rules and paperwork and then you have the SEIS stuff on top. Most of these small investments will go on servicing the endless trivial requirements of the bureaucrats above rather than on the core business.