Mercia's Knowledge-intensive EIS fund is now open and will close on the 5th April 2024.
As an HMRC-approved EIS fund, investors will be able to claim income tax relief for up to one year from when the fund closes, enabling income tax carry-back to the 2022/23 tax year, as well as 2023/24.
The fund aims to invest over a six-month deployment period, into about 12 knowledge-intensive EIS-qualifying companies and aims to triple invested capital in five to seven years, including tax reliefs.
Find out more about our knowledge-intensive fund:
The main attraction for investors of a knowledge-intensive EIS is that it is HMRC-approved, which means that the investment date for tax purposes is the tax year of the fund close, rather than the tax year in which funds are deployed.
We are targeting a deployment of 6 months for this fund, to optimise how quickly we can start creating value in portfolio companies, and so clients can benefit from the cash flow from tax reliefs.
As usual with an EIS, you may claim up to 30% income tax relief on EIS investments in the tax year of the investment date or carry back to the previous tax year. However, with this approved fund, not relying on the speed of deployment you may with more certainty target the desired tax year for income tax relief and carry back one year earlier than with a typical EIS.
There is also reduced administration when claiming back the tax, as only a single EIS5 tax certificate is issued upon completion of deployment.
Again, as usual with EIS, capital gains deferral (of any size) can be made up to three years before and one year after the investment and you may defer a gain even if you have already paid the tax. Most EIS-qualifying investments attract 100% Inheritance Tax relief via Business Relief.
Kim’s financial adviser recommends a knowledge-intensive EIS to take advantage of the certainty of income tax relief carry back with an approved fund.
By investing in a knowledge-intensive EIS, Kim can reclaim all the income tax that she paid from 2021/2022 and 2022/2023, whilst potentially creating a rapidly growing asset that will qualify for Business Relief (if held for two years).
As an HMRC-approved fund, the date of the investment for tax purposes would be the date of the fund close (5th April 2024 in Mercia’s case) and therefore fall into the tax year the client makes the investment, rather than the tax year the funds are deployed.
After registering your email address you will receive a link via email allowing you to complete the application.
Submitting on behalf of a client
Please select whether you are applying for yourself or if you are an adviser applying on a client's behalf.
If the latter, once complete the form will be emailed to your client where they may review and accept the agreement.
Once submitted, we will confirm once the application has been approved, at which point the subscription may be sent via bank transfer using the details provided.
Following this, we will confirm receipt of funds to you and log-in details to the online Investor Centre will be sent via email to both you and the client within 5 working days.
Information and Risk Warning:
*Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment and you are unlikely to be protected if something goes wrong. Take 2 minutes to learn more. Please note that investments made into the Mercia Knowledge-intensive EIS Fund should be regarded as being of a long-term and illiquid nature, of significant and high risk. Please read the full risk warnings in the Fund documentation before applying.
Please note: Past performance is not necessarily a guide to future performance. The value of an investment may go down as well as up, in which case an investor may not get back the amount invested. Investments in small unquoted companies carry an above-average level of risk. These investments are highly illiquid and as such, there may not be a readily available market to sell such an investment. Where an investment is denominated in a currency other than Sterling then changes in the exchange rate between currencies may adversely affect the value of that investment. You or your adviser must provide evidence that you meet the qualifying criteria, such as “high net worth” or “sophisticated investor” certification with your application.
Mercia Fund Management Limited, a subsidiary of Mercia Asset Management PLC, is the manager of the EIS fund and is authorised and regulated by the Financial Conduct Authority.