The following points are of note:
a. any dividends are taxable;
b. during the minimum investment period of 3 years investors may not hold any rights that protect them from the risk of investment such as the right to redeem the shares;
c. investors may lose their entire investment (although the losses may be set against income or gains at the taxpayer's highest rate of tax under paragraph 2(d) above);
d. the 'qualifying' company must be public, thereby exposing it to regulatory and statutory obligations;
e. if the minimum amount is not raised within 40 days of the issue of the prospectus, all funds must be returned to investors; and f. the benefits of an EIS scheme are geographically limited to people who are resident and ordinarily resident in the UK for tax purposes.
Please also note that this is only a summary and potential investors must obtain independent specialist investment advice before investing in an EIS scheme.
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