The majority of UK investors do not know about the tax reliefs available through Enterprise Investment Schemes (EIS), meaning they are missing out on an investment opportunity, according to the chief executive of SyndicateRoom.
Speaking to Money Management’s Craig Rickman, Gonçalo de Vasconcelos, chief executive of investment platform SyndicateRoom, said: "EIS has been used by well-informed, well-advised wealthy investors because they have professional advisers behind them.
"And they have been using EIS for years and years as a way of managing their tax bills and to invest into high growth companies."
But he added: "The vast majority of UK investors don’t really know about EIS tax relief. That’s a real shame."
Investors can claim up to 30 per cent tax relief on EIS-qualifying investments, which must be held by the investor for a minimum of three years and tend to be early stage companies.
Mr de Vasconcelos stressed: "Anyone can use it, as long as they are a UK taxpayer. It’s not a tax scheme that is just for wealthy individuals, they just tend to be better informed and make better use of it."
However, he acknowledged that EIS investments are more high risk than investments in listed companies because they are related to high growth companies.
This means "there’s a higher risk of failure and you losing part of your investment or the entirety of your investment to that company", he cautioned.
"As long as people understand that risk and the opportunity then I think anyone should really be allowed to invest," he added. "The person investing £1,000 should really be investing in the same opportunities as the person investing £1m."
The government recently announced changes to EIS, which means funds now have to invest in more "knowledge intensive" companies.
Mr de Vasconcelos explained the "whole ethos [of EIS] was to encourage investors to invest into early stage companies in the UK". But the impact of the changes has been hard to measure so far, he said.
Mr de Vasconcelos said: "The part that was restricted was some schemes where EIS was being used to back, effectively, safer investments, or asset-backed schemes and capital preservation investment opportunities – and that’s not in agreement with the ethos behind EIS.
"So that part was effectively curbed by the government and, in my opinion, rightly so."
He added: "The amount of capital that goes into high growth companies, now that some investors don’t have these capital preservation schemes and they have to invest in high growth companies, in my opinion is bound to increase."
eleanor.duncan@ft.com
