48 Tax Reliefs 496.2 <strong>EIS</strong> Tax ReliefsTax Incentive 1: Income Tax ReliefUnder current legislation, you may receiveincome tax relief at 30 per cent of theamount of your investments in <strong>EIS</strong> QualifyingCompanies made through the <strong>Fund</strong>,thereby offering the potential for significantenhancement of your post-tax return overtime. As with S<strong>EIS</strong> income tax relief claims,claims for <strong>EIS</strong> income tax relief are given bysetting off against an individual’s income taxliability in the tax year in which an Investmentis made or, if requested, in the precedingtax year, a sum equal to the full amount ofthe <strong>EIS</strong> Qualifying Investment up to £1 millionmultiplied by the level of relief (30 per cent forthe tax year 2012/2013). This is subject to anyincome tax relief which has already beenclaimed under the <strong>EIS</strong> for that year.Husbands and wives, and civil partners, caneach contribute up to the limits set out above.The relief is given against the individual’sincome tax liability for the tax year in whichthe shares are issued unless the individualmakes a claim to carry back income tax reliefto the immediately preceding year.Tax Incentive 2: Tax free capital gainsYou will enjoy tax free capital gains onany increase in value of the <strong>EIS</strong> QualifyingInvestment in which the <strong>Fund</strong> invests, whenthese shares are sold.<strong>EIS</strong> InvestmentExcluding <strong>EIS</strong> taxbenefitsInitial investment £100,000 £100,000Income tax relief (£30,000) -Net cost £70,000 £100,000Proceeds (assumes 15 per cent) £115,000 £115,000Net gain £45,000 £15,000CGT (currently 28 per cent) - (£4,200)NET GAIN TO INVESTOR £45,000 £10,800Tax Incentive 3: Inheritance Tax ReliefAlthough not an <strong>EIS</strong> tax relief as such, as withS<strong>EIS</strong> Qualifying Investments, an <strong>EIS</strong> QualifyingInvestment will qualify for 100 per cent relieffrom IHT under current legislation, providedthe <strong>EIS</strong> Qualifying Investment has been heldfor at least two years and is still held at timeof death and remains unlisted.Tax Incentive 4: Capital Gains Tax DeferralIf you have made a capital gain which istaxable or which was taxed within the lastthree years, you can invest the gain in <strong>EIS</strong>Qualifying Investments through the <strong>Fund</strong>and the capital gains tax can, under currentlegislation, be deferred over the life of theinvestment or recovered (if already paid).You have three years from the date you realisea gain to invest it into <strong>EIS</strong> Qualifying Investments(you can even reclaim capital gains tax youpaid in the preceding two years) or go forwardone year from the date on which the <strong>Fund</strong>invests in <strong>EIS</strong> Qualifying Investments. If you diewhilst your money is invested in the <strong>Fund</strong>, thetax due on your deferred capital gain will diewith you. The initial deferral therefore leads (ondeath) to capital gains elimination.Whilst income relief at 30 per cent is limited tothe first £1 million invested in any tax year, thereis no upper limit on the size of the capital gainthat can be deferred after two tax years.Tax Incentive 5: Loss ReliefAs is the case with S<strong>EIS</strong> Qualifying Investments,in the event of a poor performing <strong>EIS</strong> QualifyingInvestment there is some return on the downsidethrough loss relief. If you make a loss on aninvestment in an <strong>EIS</strong> Qualifying Company, thenet amount of that loss (i.e. after deductingany income tax relief obtained on making theinvestment) can be set off against your taxableincome in the year in which the loss is made, orcan be carried back to the previous tax year.Tax relief is available at any time in respect ofany loss realised upon a disposal of shares in an<strong>EIS</strong> Qualifying Company on which <strong>EIS</strong> incometax relief (see Tax Incentive 1 above) or CGTdeferral relief (see Tax Incentive 4 above) hasbeen given and not withdrawn. The amountof the loss (after taking account of any incometax relief initially obtained) can be set againstthe individual’s gains in the tax year in whichthe disposal occurs, or, if not fully used, againstgains of a subsequent year. Alternatively, onmaking a claim, the loss net of income tax reliefmay be set off against the individual’s taxableincome in either the tax year in which thedisposal occurs, or the previous tax year.In his March 2012 Budget speech theChancellor of the Exchequer proposed thatfrom 2013/14 any investor seeking to claimloss relief will be restricted to a cap set at25% of their income or £50,000 whicheveris the greater. Draft legislation is due to bepublished in Autumn 2012.The figures in this section are examples only.They are not, and should not be construed as,forecasts or projections of the likely performanceof the investment described in this document.Please note that this is only a condensedsummary of the taxation legislation and shouldnot be construed as constituting advice which apotential Investor should obtain from his/herown investment or taxation adviser beforeapplying for an investment in the <strong>Fund</strong>. Thevalue of any tax reliefs will depend on theindividual circumstances of Investors.
50 Operation of The <strong>Fund</strong> 517. Operation of the <strong>Fund</strong>The <strong>Fund</strong> has been designed to make claimingthe tax reliefs as quick and easy as possible.7.1 Claiming your Tax ReliefOnce an Investment has been made in anInvestee Company, <strong>Jenson</strong> will work with theInvestee Company to prepare and send offS<strong>EIS</strong> and <strong>EIS</strong> compliance certificates to HMRC,demonstrating that the Investee Company isa S<strong>EIS</strong> and/or <strong>EIS</strong> Qualifying Company.As soon as practicable after an InvesteeCompany has been trading for 4 months(in the case of both a S<strong>EIS</strong> and an <strong>EIS</strong>investment) or, alternatively (in the caseof a S<strong>EIS</strong> Investment only) once 70% of themoneys raised have been spent, the InvesteeCompany will send to the Investor a S<strong>EIS</strong>certificate or, as the case may be a form <strong>EIS</strong> 3.Investors must send these forms to HMRC withtheir tax returns in order to claim any incomeand capital gains tax reliefs.7.2 Return on Exit of the <strong>Fund</strong>’sInvestmentsOn sale of the <strong>Fund</strong>’s Investments, the netproceeds are distributed to the Investor or,if you so choose, may be re-invested in anew <strong>Jenson</strong> fund (assuming the new fundmakes S<strong>EIS</strong> and <strong>EIS</strong> Qualifying Investmentsand that there has been no change tothe legislation). Re-investment in new <strong>EIS</strong>Qualifying Investments should ensure anycapital gains continue to be deferredand a further 30% or 50% income tax reliefbecomes available.7.3 Your AccountYour Contributions and all dividends andproceeds of sale of Investments pendingtheir distribution will be deposited bythe Administrator & Custodian with anauthorised and reputable banking institutionin a client account in the name of theAdministrator & Custodian referenced”Reyker Securities plc Client Account Re:<strong>Jenson</strong>” with client trust status togetherwith cash balances belonging to otherInvestors. The mandate for operation of theaccount shall be held by the Administrator &Custodian and any interest arising therefromwill be retained to cover administration costsand not paid to Investors.7.4 Practising Accountants andother Professional PersonsWe will arrange to exclude practisingaccountants or other professional persons fromany Investment that their professional rulesprevent them from making provided that detailsof potential conflicts and such qualificationsare notified to us. Any amounts not invested forthis reason will be returned to the participantsconcerned and will not be used to increase theirshare of other <strong>Fund</strong> Investments unless you notifyus at the time.