These changes, scheduled for inclusion in the 2012 Finance Bill, will enable EISs to invest in bigger companies and are expected to make EISs more attractive to investors. The reforms enable EISs to invest in firms with gross assets of £15m and up to 250 employees, up from £7m and 50 employees respectively. From April, the amount investors can put in an EIS fund will double to £1m and the income tax relief available to EIS investors has already been increased from 20 per cent to 30 per cent.
Calculus launched the first HMRC approved EIS in 2000. In keeping with its previous EIS offers, the Calculus Capital EIS Fund 12 will take a lower-risk approach, with a focus on capital preservation as well as growth. It will invest in at least six EIS qualifying companies, with a preference for established, more mature companies with predictable cash flows and significant growth potential rather than untested start-ups.
The firm says good investment opportunities are coming along becausethe economic difficulties of the last three years mean company valuations now much lower and good unquoted companies are still finding it difficult to borrow from banks to fund expansion plans and acquisitions. The firm also believes the reforms outlined in the Budget make EIS more attractive than ever. It thinks the fund could be the ideal tax-efficient investment for clients with a high income, inheritance or capital gains tax liabilities and those wanting to top up their retirement savings.
This fund offers the diversity that a single EIS investing in one business cannot provide and having an experienced team to select the investments may provide a comfort factor for investors. However, EIS investments are not everyone because the unquoted firms in which they invest have higher risks and are less liquid than bigger, quoted companies.