Eis 01 january february edition by Alex Sullivan

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www.eismagazine.com JANUARY/FEBRUARY 2015 ISSUE 01

The IFA Gu i d e t o Ta x Eff i ci e n t I n ve s t i n g

GREEN LIGHT MOVING TAX EFFICIENT INVESTING FORWARD

OVER Open Offers

SEIS

TAX AND STRATEGY EIS

VCT

OEIC

IHT

INVESTING IN

LEADING EDGE TECHNOLOGY

BPR

Welcome

A new chapter starts here. Michael Wilson explains why we started EIS Magazine, & what we hope Advisers can get from it.

EIS Magazine is published by

IFA Magazine Publications Limited, The Old Wheelwrights, Ham, Berkley, Gloucestershire GL13 9QH Full subscription details and eligibility criteria are available at www.eismagazine.com ©2015. All rights reserved.

The View from EISA

The EIS Tolley Diploma

News In Brief

Sarah Wadham, Director General of the EISA, on why 2015 is going to be the year for EIS and alternative funds.

And why every Adviser ought to think about signing up for it

Our monthly round-up of news stories. Keep sending us your news, please.

Telephone: +44 (0)117 9089 686 Editor: Michael Wilson editor@ifamagazine.com

Publishing director: Alex Sullivan alex.sullivan@ifamagazine.com

Design: Fanatic Design www.fanaticdesign.co.uk EIS Magazine is for professional advisors only. Full subscription details and eligibility criteria are available at www.eismagazine.com EIS Magazine is a trademark of IFA Magazine Publications Limited. No part of this publication may be reproduced or stored in any printed or electronic retrieval system wihtout prior permission. All material has been carefully checked for accuracy, but no responsibility can be accepted for inaccuracies, independent research and where necesary legal advice should be sought before acting on any information contained in this publication.

11. The MICAP Fund Finder Portal The power to change everything. MICAP CEO Andy Marris presents a revolutionary new database of EIS/SEIS/VCT/BPR investments. And it won’t cost you a penny to try it out.

14. EIS and the Alternative Investment Market Shane Gallwey, Fund Manager at the Guinness AIM EIS 2015, says the relationship goes further than you think.

18. VCT Funds - A guide Richard Wazacz, Line Manager for VCTs at Octopus Investments, discusses how VentureCapital Trusts work, and how they can be used to achieve different goals.

Upcoming Events Tax Efficient Investing for HNW Clients A Year-End Adviser Seminar on EIS/VCT and BPR Investments from IFA Magazine and EIS Magazine Tuesday 24th February 2015 Hyatt Regency Hotel, Birmingham Thursday 26th February 2015 The Capital Club, London These extended morning seminars will explore the possibilities for HNW investors of all types, and will explore EIS/SEIS, VCT, BPR and SITR investments with an impressive panel of expert speakers.

22. Leading Edge Technology Mercia’s Talon Golding looks at how EIS funds can promote small tech companies. And how it can hold onto them after they’ve stopped being small.

26. Tax and Eligibility - The Basics

Michael Wilson presents a brief guide to the available reliefs

30. Open Offers

Our monthly listing of what’s currently available for subscription.

46. Timing Your Exit

Guy Tolhurst, MD at Intelligent Finance, explains how the best stage exits are planned long in advance. And with plenty of curtain calls. www.eismagazine.com · January/February 2015

Welcome I’ve got this problem that’s been bothering me for weeks, so bear with me. I’m trying to find out what the opposite of the phrase ‘Perfect Storm’ might be? Perfect Calm? No, I don’t think so. Perfect Convergence? Sounds too scientific, somehow. Perfect Circumstance? No, too vague. And the dictionary’s no help. I suppose I’ll have to keep on looking. Whatever it is, though, that’s what we’ve got right now. It’s a convergence of totally disparate factors that ranges from last year’s reduction of the lifetime pension contributions limit and the general search for better risk rewards, right through to a desperate shortage of bank lending for small and early-stage companies – and, finally, on to the popular-culture focus on early-stage investment through Dragons’ Den, crowdfunding and all the rest of it. All of it gift-wrapped in a government commitment to making alternative investments as tax-friendly and attractive as possible. (Thus neatly sidestepping the awkward issues about the banks’ reluctance to lend, but that’s another story.) Was there ever such a meeting of needs? A Record Year Is it any surprise that the 2014/15 tax year that’s now ending has seen EIS investment topping £1.5 billion for the first time, or that many VCT funds look set to close well ahead of April because of an extraordinary level of demand? Should we be impressed that well over 1,100 brand new companies have now obtained seed capital through the SEIS system, and that the flow of new applications is rising by as much as 25% a year? Make no mistake, early stage is smart right now. And the range of tax-effective options is growing all the time – from 2012’s Seed EIS regime to last year’s Social Investment Tax Relief (SITR), with more expected in due course. Specialist tax-efficient vehicles like Business Property Relief (BPR)

schemes are rapidly gaining popularity. There are funds for pubs and restaurants, stage entertainment, wine, health services. Nobody ever said early-stage had to be just about technology. An Information Hub But Advisers are still feeling uncertain about these schemes. How do the tax breaks work, they ask, and are they safe from future government meddling? What sort of clients should sensibly be looking at them, and what are the time horizons? How far do an Adviser’s responsibilities extend? And are there any EIS-type investments that can mitigate client risk or offer greater flexibility? These are the kinds of issues we’ll be focusing on, here at EIS Magazine. No question is too simple or too complex. Just ask us. Take a look at our Open Offers section, which is already proving wildly popular as a resource for Advisers. Try your hand at the new fund comparison service from MICAP, free of charge. And then come back to us with more questions. EIS Many thanks for reading EIS Magazine, and we hope you enjoy it With Best Wishes

Michael Wilson, Editor

At Ingenious, we aim to provide advisers and their clients with straightforward, yet innovative and versatile financial planning solutions. We have built up an enviable track record of success over our 17 year history, offering unrivalled industry connections, predictable returns and timely return of capital to investors. We offer a number of EIS qualifying investments:

SHELLEY MEDIA EIS Investing in global content for film and television

INGENIOUS RENEWABLE ENERGY EIS Investing in clean energy projects in the UK

INGENIOUS PATHÉ PLUS EIS Investing in independent feature films produced by Pathé

INVITATION

FINANCIAL PLANNING IDEAS BREAKFAST We’re holding a nationwide series of breakfasts in February. To reserve your place visit ingeniousinvestments.co.uk/events

FIND OUT MORE To find out more about our current EIS opportunities, please contact us on 020 7319 4291 or visit ingeniousinvestments.co.uk

FULL PAGE ADVERT

This notice is for professional advisers only. Not for retail clients. Investment involves a high degree of risk. Past performance is not a guide to future performance and may not be repeated. The value of an investment may go down as well as up and your client may not get back the full amount invested. Ingenious Investments is a trading name of Ingenious Capital Management Limited. Authorised and regulated by the Financial Conduct Authority. Registered in England Wales at 15 Golden Square London W1F 9JG. Registration number 7728908.

Spreading The Word By Sarah Wadham, EIS Association Director General

It is estimated that up to £1.5bn will be invested into EISand SEIS companies in the year to April 2015

As Director General of the EIS Association, may I extend a warm welcome to the launch issue of EIS Magazine. As you’ll be aware, EIS and SEIS are becoming increasingly important, both as legitimate tax planning tools but equally importantly as a means of channelling much needed equity capital into early stage and developing UK entrepreneurial companies. It is estimated that up to £1.5bn will be invested into these companies in the year to April 2015. This investment fuels innovation and growth in employment, and it is vital for the growth of the wider economy. The EISA is the trade body for the EIS and SEIS industry. Its members are the EIS and SEIS funds and the lawyers, 6

EIS Magazine · January/February 2015

accountants and corporate financiers who advise both the companies seeking investment and the investors. The EISA maintains close relationships with the Treasury and HMRC and the FCA to ensure that the EIS/SEIS reliefs work effectively to support small and growing businesses. This summer the EISA made an extensive submission to the Treasury/ HMRC Consultation on the working of Tax Advantaged Venture Capital Schemes which will form the basis for negotiations with the European Union. Other major achievements of the EISA include encouraging the raising of the investment limits for EIS companies in 2012, which has allowed investment into larger companies.

Building A Confident Future This has encouraged investment from new investors who might have considered earlier stage companies as too high risk. And yet EIS and SEIS are often still perceived as complex, meaning that many IFAs have hesitated to recommend them to their clients. In recognition of this, the EISA in conjunction with Tolley Exam Training, have launched the EIS Diploma, an online course with an accredited final exam. Several EIS Fund providers will be holding Diploma workshops for their IFA contacts. But we’re not stopping there. In addition, to encourage and recognise excellence and professionalism in the industry, the EISA has re-launched the highly prized EIS/SEIS Awards. This year these will be judged by independent outside judges against set criteria. The EISA has also launched Green Shoots for younger professionals in the industry and is encouraging greater links with the entrepreneurial companies seeking investment. For more details on the EISA, the Tax Reliefs and the Diploma, please visit the EISA website: www.eisa.org.uk or email: info@eisa.org.uk With very best wishes to EIS Magazine, and to all Advisers and Providers Sarah J. Wadham Director General

EIS Diploma By Mary Rodgers, EISA Membership Manager Given that we are seeing increasing levels of interest and investment into EIS qualifying companies and funds, it is vital that financial advisers and wealth managers are fully aware of how the Enterprise Investment Scheme operates, including the ways to invest in EIS companies and funds and which investors these investments are appropriate for. As such, Tolley® Exam Training, in conjunction with the Enterprise Investment Scheme Association (EISA) have launched the Enterprise Investment Scheme Diploma, a comprehensive, self-study diploma covering all aspects of EIS, including the tax implications, regulatory aspects and the wider funds and schemes landscape. It demonstrates effective ways to utilise investments efficiently to maximise the benefits in an easy to understand manner.

Anyone studying for the EIS Diploma with Tolley® Exam Training will receive:

• A comprehensive study manual with useful summaries to aid understanding and practice examples, many of which are in the multiple choice format that will be seen in the final Diploma exam

• Access to the Tolley® Online Academy, also available as an app, where you can access all study material either online or offline, and ask queries on the Student Forums • Full support from the experienced tutor team

• Access to the Tolley® Online Exam Centre for all the Diploma and mock exams. The mock is representative of the final exam testing environment providing ample familiarity and practice to aid a first time pass • A Diploma certificate on passing, accredited by the EISA • 15 hours of CPD

The final Diploma exam is a 60 minute online test and covers the full syllabus. There is also a full syllabus mock in preparation for the final Diploma exam. Both are multiple choice exams available from the Tolley® Online Exam Centre so have complete flexibility to be sat at any time. For more information on studying for the EIS Diploma please visit tolley.co.uk/eisdiploma, email examtraining@lexisnexis.co.uk or call 020 3364 4500

BE FIRST OVER THE LINE

www.eismagazine.com · January/February 2015

News In Brief Round up of the latest industry news

LAUNCHED 2012

£83.7m

1,120 small companies secured funding

seed funding raised

BY JANUARY 2015

SEIS Approvals Into Four Figures The Seed Enterprise Investment Scheme (SEIS), which launched only in 2012, has already logged up its first four-figure result, according to research by Radius Equity. 1,120 small companies had secured funding by January 2015, it said, and a total of £83.7 million in seed funding had been raised. But, it added, there is still significant potential for take-up to grow. Favourite sectors for SEIS investment include information and

computer technology, Radius reports: ICT accounts for fully 32% of the funds invested so far under SEIS – the highest of any sector - with the number of applicants having risen 26% last year. Business services accounted for 22% of the total; distribution, restaurants and catering for 14%; recreational activities for 13%; manufacturing for 8%; and energy and water supply for 3.5%.

Hot Cakes Many VCTs are currently on track to close sooner than originally anticipated because they are well ahead of their fundraising targets, according to analysis from investment provider Clubfinance. By mid-January, it said, the Maven Income & Growth 4 had already closed while the Maven Income & Growth VCT had attained 70% of its quota. Elderstreet VCT had hit 80% and British Smaller Companies VCT and VCT2 had both achieved 40%. Things were also moving smartly among Alternative Investment Market VCTs, where the Hargreave Hale AIM VCTs 1 and 2 had both passed the 41% mark. Octopus AIM VCT 1 and 2 had been quoted at 65% and 55% respectively, while Unicorn AIM VCT had reached 64% of its target. Mark Wignall at Mobeus Equity Partners had told the FT in December of his concern about the danger of a ‘supply and demand mismatch’, caused, he says, by greater risk tolerance, poor returns from alternatives, and – not least - clampdowns on unapproved tax avoidance schemes.” Quite so.

Alternative Energy: Changes in April A reminder that changes to the investment rules in April will mean that VCTs, EIS, SEIS will no longer be able to invest in renewable energy schemes, including anaerobic digestion and hydroelectric power, with effect from 6th April. Effectively, this creates a window of opportunity for investors which will close at the end of the tax year. In practice, EIS, SEIS and VCT companies have been barred since last July from investing in solar and wind schemes, because they 8

EIS Magazine · January/February 2015

have been excluded from benefiting from the Renewables Obligation Certificates (Rocs) and the Renewable Heat Incentive (RHI) scheme. The Treasury’s extension of the ban into areas such as anaerobic digestion and hydroelectric power is the next step. But the guidance is those companies which themselves don’t receive the benefits from feed-in tariffs, Rocs, RHI etc will remain eligible for funding.

News In Brief

Election Nightmare What’s on advisers’ minds this year? Not the economy, to judge by responses to a survey of attendees at Octopus Investments’ annual event in London on 21st January. 67% of those polled said that political uncertainty around the general election in May is keeping them more awake than economic uncertainty or a possible slowdown in recovery and global growth. 94% of the respondents confirmed that they were seeing increased demand for VCTs and EIS, Octopus says, and 78% felt that this was largely due to VCTs and EIS being more widely recognised tax-efficient investment solutions. One in three added that they feel the recent pension reforms have created an opportunity for more people to think about alternative taxefficient investment solutions to support their retirement.

Digitising the Process One of the more widely overlooked highlights of Chancellor George Osborne’s Autumn Statement was a commitment to set up a new online system, by 2016 at the latest, which he said will allow investors easier access to EIS, SEIS and SITR. A similar format for VCTs is also planned, the Chancellor said. Essentially, the new system will allow investors to register digitally. And in principle, that should be a good thing for early-stage companies seeking easy penetration. But inevitably, there are those who worry that the new system will enhance HMRC’s ability to scrutinise taxefficient vehicles, by making it easier for HMRC to discover which investors are using such schemes. Some have expressed fears that it may usher in a sharper investigative line on tax avoidance schemes. Conversely, the changes ought to speed up the very slow process of receiving HMRC approval for a tax-efficient scheme. Here’s hoping.

Green Shoots Getting the EIS message out to advisers isn’t enough for EISA Director General Sarah Wadham, it seems. The organisation is also extending its reach into the younger end of the business by launching a junior branch entitled Green Shoots, which it says is designed “to provide young professionals in the industry with the chance to independently develop their own networks, interest and awareness of the world of alternative investments.” The aim of the enterprise, EISA says, is “to create a space where our members can meet and interact with early-stage companies, keep up to date on industry trends, as well as build early and lasting business

relationships with each other…. We do this through holding evening networking events with guest speakers, sending out regular updates and hosting bi-annual technical seminars.” Membership, which costs £100 a year, provides access to Green Shoots evening networking events; a bi-annual technical seminar (CPD accredited); a listing on the Green Shoots member page at the EISA website; the chance to win a ticket for the prestigious annual EISA Awards held at the House of Lords; and, not least, the ability to enter for the “Best Innovator/Newcomer/Rising Star in EIS” category at the EISA awards.

Time for Training It’s not too late to beef up your knowledge levels, you know. The next three months will bring a series of important opportunities for advisers to hone their EIS, SEIS, VCT, BPR and SITR skills – many of them in the comfort of luxurious surroundings with food, drink and a chance for essential networking. What better way to pick up some CPD points?

IFA Magazine Events Firstly, there are two EIS and Tax Planning events from IFA Magazine, which also owns EIS Magazine. The first kicks off on 24th February 2015 at Birmingham, and the second on 26th February in London. Both of these extended morning seminars will explore the possibilities for HNW investors of all types, and will explore EIS/SEIS, VCT, BPR and SITR investments with an impressive panel of expert speakers. We will also be demonstrating MICAP’s radically new online service, as described on Page 11 which allows advisers to examine, compare, assess and recommend to clients from a brand new comparison portal covering 120 funds.

The two seminars are CPD qualifying, of course, and they are free to attendees. Places are limited, so do contact us as soon as possible to reserve your seats. Details at http:// tinyurl.com/no5dogd, or from the IFA Magazine website at www.ifamagazine.com. Intelligent Partnership EIS Masterclass Guy Tolhurst, this month’s contributor on tax exit strategies, is running a four-hour seminar and workshop in London on 5th March on the subject of EIS investment. Details can be found on Page 46. And as you’ll see, readers of EIS Magazine qualify for a reduced attendance fee of £65, compared with the standard £95 fee. Details from http://tinyurl.com/lpwjtsc. The EIS Tolley Diploma As featured on Page, EISA has teamed up with Tolley and with Kuber Ventures to present the EIS Tolley Diploma, an accessible online study course which leads to an EISAaccredited diploma, a comprehensive study manual, access to the Tolley Online Academy – and 15 hours’ of CPD. Details from tolley.co.uk/ eisdiploma, or email examtraining@ lexisnexis.co.uk. Tel: 020 3364 4500

www.eismagazine.com · January/February 2015

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Twenty Four Seven IFA Magazine, Britain’s premier online portal and print publication for financial advisers, has launched its ver y own app designed to help you stay up to date with all the latest financial and economic news as it happens.

Main Features: Reviews Features Funds Market and Economics Trading Expert FCA Compliance Jobs

EIS Magazine · January/February 2015

Time is Money... EIS Magazine talks to Andy Marris, CEO of MICAP

The increased interest in tax-efficient investments presents a significant opportunity for advisers, it’s not without it challenges though - not least getting a whole of market view. MICAP addresses this need head on, saving advisers considerable time and money

Cometh the time, cometh the product. If ever there were a moment for a properly comparative online system that could enable advisers to compare and assess the growing EIS, SEIS, VCT and BPR marketplace, this must surely be it. The very rapid growth of investment alternatives over the last few years is enabling clients and their advisers to extend their engagement with risk investments in a way that would hardly have been thinkable five years ago. The government is right behind it. Yet the difficulty of obtaining suitable material for due diligence has been holding many advisers back – fearful of long-term consequences if they turn out to have made the wrong recommendations. Surely it can’t be that impossible

to set up a one-stop portal that would enable advisers to compare every available EIS, SEIS and VCT, Morningstar-style? That’s what Andy Marris, CEO of London-based MI Capital Research Ltd, thought when he set up MICAP in September 2013. Just over a year down the line, and a lot of development time later, the MICAP Fund Finder has arrived. “My own research showed that in this rapidly growing market, advisers lack three things,” says Marris: “Product knowledge, an up to date all-of-market view and time to conduct their due diligence. So any system which can give them access to this information from anywhere must not only help them comply but add significant value to their business.”

A Meeting of Needs The point is that, as Marris puts it, advisers are stuck in an inefficient market which makes it difficult for clients and their advisers to connect effectively with suppliers - or even to identify the differences between their various offerings at all. And that inefficiency, in turn, can easily become a daunting bottleneck between advisers and the regulations that they need to adhere to. “On the one hand,” he says, “there are lots of new and exciting offers coming onto the marketplace and a lot of disenchanted investors looking for alternatives to the existing mainstream options. And on the other, the traditional appeal of pensions and other more aggressive structures is no longer so

www.eismagazine.com · January/February 2015

Time is Money

An IFA who didn’t at least consider EIS and VCT propositions could find himself being asked why not.

strong as it was. Changes to the lifetime contribution limit, and a less tolerant HMRC in respect of highly structured schemes, are literally driving higher earners to seek out new ground that can help them optimise the tax efficiency of their investments.” To complete the picture, of course, are hundreds of small and earlystage companies which are becoming disenchanted with the growing difficulty they face in raising funding from banks, some of which are still unwilling to lend. A situation which has been clearly understood by the Government and by HMRC - both of which are throwing their full weight behind the EIS, SEIS and VCT concepts. And yet the task of connecting

EIS Magazine · January/Febuary 2015

investors with suitable EIS investment propositions has not been easy until recently. The wide field of EIS providers has always been somewhat fragmented, and even today there are relatively few that are big enough to have made it onto many advisers’ radars. More importantly, there’s a serious lack of standardised data about the various investments available, and assessing and comparing risk is still seen by many advisers as a daunting and time-consuming challenge that puts a great many off the idea altogether. Plugging the Information Gap Not that being “put off” is a good enough excuse for not doing anything about EIS investments, Marris says. Post-RDR, independent advisers are required to consider all of the market when making recommendations – and the FCA has made it perfectly clear that it considers EIS products to be fully mainstream. An IFA who didn’t at least consider EIS and VCT propositions could find himself being asked why not. That’s a particular horror for some advisers, because the FCA and compliance also requires them to document their client advice in detail, and to be able to justify in retrospect why they plumped for one option or the other. Without a standardised platform on which to compare and process these diverse and often small-

scale funds (many issues are raising less than £10 million at a time), the implications for due diligence and record-keeping appear sobering. A significant point, given that the rising cost of PII insurance is a particularly timely reflection of the mounting pressures that advisers face. Let’s remember too that the time savings that can be achieved are considerable. Administration is always one of the largest drains on profitability, Marris says, and being able to access uniformly-organised information across a range of products can make a serious difference. Time is money, after all. It’s Not A New Idea…. Hence the decision, Marris says, to put tax efficient investments on the same sort of comparison portal that any consumer buying insurance or cars or holidays is already taking for granted. A sort of GoCompare. com that enables clients and their advisers to achieve quick and incisive comparisons – of investment proposition, risk, sector, investment horizon and so forth. All of it backed up by a unified system of Morningstar-like rating and risk assessment which ought to enable advisers to whittle down the options in a very time-efficient manner. As standard and alongside all key data in an investment product, MICAP will

Time is Money

assess and score the intrinsic risks, such that the adviser can quickly see MICAP’s view of where the risk impacts are. The more in-depth reviews are based on detailed assessments by MICAP’s own specialist team. There are dozens of online tools designed to make life easier - from being able to download product brochures and application forms, to creating personalised date stamped printouts to record the advice process and from sorting, filtering and comparing products to building and saving bespoke portfolios and contacting the promoters/managers directly. There’s also scope on the website for a user to record his own ratings and favourites for future reference.

120 Funds at the Click of a Mouse That’s only a small part of the service, obviously. The growing list of investment schemes currently listed on MICAP’s portal can be sorted at the click of a mouse according to their managers, their promoters, their offer type (EIS, VCT, SEIS, BPR etc), their launch and close dates, and of course their fundraising targets. Information about any investor restrictions (UCIS etc), sector and fund structure are all on tap in a fully comparable manner. Investment schemes can then be shortlisted and selected with another couple of clicks. It doesn’t get much simpler than this.

Keeping Up With the Paperwork But, for many advisers, the ability to achieve a standardised record of the transaction, whether it’s a purchase or just a recommendation, is also key to making the whole proposition easier and more time-effective for advisers. Marris says that easing the burden of compliance and administration is

a fundamental element of the MICAP system that should help to ensure the utmost efficiency for users.

Finding Out More MICAP’s Fund Finder is available to all registered users who will be able to see a complete listing of all the products on the Fund Finder, access the IMs and view some of the key data, all for free. The full data set and risk impact assessments together with all the tools are only available to premium users. Premium Subscriptions start from as little as £50pm for an IFA firm with up to 5 users. To find out more, please visit www. micap.com and register for a free account. If you would like to know more, please contact them on info@ micap.com, mention this article and they will arrange a WebEx demo to show you how you can benefit when using the MICAP Fund Finder. EIS

Data on over 120 investments a click away www.eismagazine.com · January/February 2015

EIS and the Alternative Investment Market Shane Gallwey, Fund Manager at the Guinness AIM EIS 2015

Investing in AIM shares can be a high risk activity, with the potential for large gains but also for losses. An EIS investment fund is a particularly effective way of achieving a diversified portfolio, within which gains are free of Capital Gains Tax and losses can be offset against the client’s tax bill with EIS Loss Relief. We launched the Guinness AIM EIS 2015, a follow on from last year’s Guinness AIM EIS 2014, precisely because we recognise the opportunity that combining AIM with EIS offers. Investing in AIM stocks also helps achieve a timely exit after three years - something that is not always possible when making unlisted EIS investments. AIM is a Stock Picker’s Market A review of the AIM market shows that it is not an investable index in itself, but rather a stock-pickers market. Since its launch in 1996 the FTSE AIM All Share index has

fallen by 30%, against a 77% growth in the FTSE 100 over the same period. The art of achieving gains, then, lies in careful stock selection, not in index tracking. Structurally, the largest sector on AIM comprises the higher risk mining and oil exploration companies - but there are also a considerable number of early stage technology companies, cash shells and overseas companies. The mining and oil exploration companies are typically not EIS qualifying and the early stage technology companies, cash shells and overseas companies are do not fit with our investment approach. We favour more established businesses, preferring a demonstrable track record, a stable management team and visibility of profits in the short term. AIM provides access to companies at a range of development stages. For the Guinness AIM EIS funds we only invest in newly issued shares with EIS Advance Assurance from HMRC, to ensure that they are EIS qualifying.

Some of our recent investments include the following: Company

Coral Products Plc

Ergomed Plc

Software Radio Technology Group Plc

Market Capitalisation

£8m

£46m

£23m

Sector

General Industrials

Pharmaceuticals

Tech Hardware

Employees

110

Turnover

£17.2m

£15.1m

£6.1m

EBITDA (pre exceptionals)

£1.4m

£1.8m

-£1.5m

Dividend yield

3.7%

n/a

Description

Coral Products are specialists in the design, manufacture and supply of injection moulded products across a wide range of industries.

Ergomed plc is a profitable UK-based company, dedicated to the provision of specialised services to the pharmaceutical industry and the development of new drugs. It operates globally in over 40 countries.

The group is the global leader in Automatic Identification System (AIS) based maritime safety and security systems.

EIS Magazine · January/February 2015

EIS and the Alternative Investment Market

We have indicated an intention to offer investors a variety of exit routes which include a sale of shares and return of cash proceeds

The Exit Advantage The EIS rules state that an EIS investment must be held for at least three years to maintain the tax reliefs, but in practice it can take considerably longer to exit some of these investments. Investee companies are usually private, and therefore the shares are illiquid. This can result in investors being ‘trapped’ in an EIS investment for far longer than they originally intended. This is where the advantages of having a portfolio of AIMlisted shares can make a difference. We launched our first Guinness AIM EIS fund in 2013 because we recognised the attractions of having underlying investments quoted on an exchange such as AIM, which provides a visible exit route. We have indicated an intention to offer investors a variety of exit routes which include a sale of shares and return of cash proceeds, an ‘in specie’ distribution of shares to their preferred broking account or a continued management of their AIM shares as an IHT-exempt portfolio. Liquidity of AIM companies varies widely, with some stocks frequently traded and others only trading a few times a month. Recent changes such as the abolition of stamp duty for AIM companies and allowing the inclusion of AIM companies in ISAs has seen a noticeable increase in both trading and liquidity. We have a preference for investments where the liquidity is likely to facilitate a straightforward market sale of the fund’s position. www.eismagazine.com · January/February 2015

EIS and the Alternative Investment Market

Claiming Tax Relief With EIS investments, the process for claiming EIS income tax relief or capital gains tax deferral is somewhat elongated. First, the underlying investments need to be made into investee companies that have already been trading for four months. If a company has not yet commenced trading, it cannot request EIS certificates for its investors until it has met this requirement. An EIS certificate is issued for each investee company. This works well for a single company investment, but if a client has subscribed to an EIS fund, he or she could easily end up with a dozen or more EIS 3 certificates that need to be completed and submitted to the revenue. To make matters worse, these can arrive at irregular intervals over an 18 month period - meaning that investors inevitably misplace some of them.

HMRC has attempted to address this issue through the introduction of the “Approved Fund” structure

HMRC ’s “Approved Fund” structure which we have adopted goes some way to addressing this issue. As an “Approved Fund”, the fund manager can issue only one EIS certificate for all the investments – called an “EIS 5 certificate” – for investors to claim relief on their total subscription. This greatly simplifies the administrative burden for investors as well as the process for claiming tax relief, and this is why we have adopted this structure for our Guinness AIM EIS funds. It is not a perfect solution – the EIS 5 certificate is only issued once 90% of subscriptions to the fund have been invested, so investors may still need to wait 12 months or so to receive this certificate.

A recent survey of EIS investors highlighted the high (and sometimes opaque) fees associated with EIS funds as a key concern Fees and Charges A recent survey of EIS investors highlighted the high (and sometimes opaque) fees associated with EIS funds as a key concern. The relatively small scale of EIS funds compared to more mainstream investment funds, coupled with a high administration burden, does account for some of this expense, but there are certain things that fund managers can do to ease this burden for investors. One such example is charging fees to investee companies as opposed to investors. This means that all of an investor’s subscription is eligible for EIS relief, not just the portion net of fees. We do this where possible for our other funds. However, when investing in AIM listed companies, it is not normally possible to charge fees to the underlying companies as we are usually one of many subscribing investors. For our Guinness AIM EIS funds, we have taken an innovative approach and defer all fees other than those to your financial advisor. This maximises the tax reliefs and should enhance returns as more capital is deployed in the companies. EIS

Name of EIS

Guinness AIM EIS 2015

Investment Focus

AIM-listed companies that qualify for EIS Relief

Target Size

£10 million

Closing Date

6 April 2015

Target Investment Subscription

Targeting full investment of subscriptions in the 2015/16 tax year. EIS Income Tax Relief can be claimed in the 2015/16 tax year or carried back to the 2014/15 tax year

Minimum Individual Subscription

£10,000

Investment Manager

Guinness Asset Management Limited

Expected Life

up to 4 years

Regulatory

The Board of HMRC has approved Guinness AIM EIS 2015 as an approved investment fund within the terms of section 251 of the Income Tax Act 2007.

EIS Magazine · January/February 2015

An Introduction For Advisors By Richard Wazacz, Business Line Manager for VCTs at Octopus Investments

These are exciting times for the Venture Capital Trust (VCT) industry. According to figures published in September 2014 by HMRC, VCT inflows hit £440 million in the 2013-2014 tax year. That’s the highest level since 2005/2006. More recent data from HMRC revealed the number of individuals claiming income tax relief on VCT investments increased by 25 per cent year-on-year for 2012-2013, the most up-to-date figures available. Perhaps the recent changes to pension rules, and the fact that the amount individuals can pay into their pensions (both lifetime and annual allowances) has been on a downward trend in recent years, is helping to underpin support for the VCT industry. Investors who are finding themselves increasingly concerned about ‘maxing out’ their pension contributions, and who therefore risk losing out on the tax benefits, could well be considering VCTs as a way to continue making tax-efficient investing part of their retirement plans. Whatever the reasons, the evidence would suggest that – 20 years after they were first introduced – VCTs are living up to their potential and being recognised by investors as a maturing investment class. Backing Growing UK Businesses Back in 1995, the UK government launched VCTs with the intention of supporting dynamic UK smaller

EIS Magazine · January/February 2015

companies. A VCT is a listed company in its own right that pools money from its investors. Like other pooled investments, this allows it to invest in a range of underlying companies, which means it spreads risk across a number of holdings either in unquoted companies or in companies on AIM. At the time it was acknowledged that, while such smaller businesses were responsible for generating a significant proportion of the UK’s economic growth, many struggled to get the right type of funding needed to grow. By introducing a number of tax incentives designed to help encourage those investors prepared to accept the risks associated with investing in smaller, unlisted companies, it was hoped individual investors would be willing – and able – to pick up where government financial incentives for companies left off. And, two decades later, those initial hopes appear to have been borne out. If anything, in the years since the recession, UK smaller companies have found it increasingly difficult to obtain bank loans and to issue debt in order to finance their growth ambitions. In that respect, for many companies funding from VCTs has been a lifesaver. According to the Association of Investment Companies (AIC) ‘Going for growth’ paper on the VCT industry published last year, the total assets invested in VCT-qualifying companies stands at £3.2 billion, and for every pound of initial tax relief returned to

Back in 1995, the UK government launched VCTs with the intention of supporting dynamic UK smaller companies

VCT if an investor puts £20,000 in a VCT

before the end of the current tax year

THEY CAN claim £6,000 off that year’s income tax bill.

investors, the average VCT investee company sees its turnover rise by £6.46. (Source: AIC: Going for growth, June 2014) So that’s the investment case made on behalf of the government and for UK smaller companies, but what about the average investor? Well it would be hard to argue that the majority of VCT investors are not drawn in by the tax reliefs, which are persuasive. Tax Incentives Associated With VCTs For starters, investors can receive up to 30% income tax relief on the amount they choose to invest in each tax year. So, for example, if an investor puts £20,000 in a VCT before the end of the current tax year, they would be able to claim £6,000 off that year’s

Investors can receive up to 30% income tax relief on the amount they choose to invest in each tax year income tax bill. However, the amount of income tax relief an investor can claim in any single tax year is capped at the first £200,000 invested, and cannot exceed the amount of income tax they’re expected to pay. After the investment is made, and after the investor receives their VCT share certificate and tax certificate, they can contact HMRC to have their tax code adjusted, which would mean they’ll immediately start paying less tax. Alternatively, if they invested at the

end of the tax year, they could apply for an immediate repayment or claim tax back through their self-assessment. It’s also worth stating that investing in a VCT is totally separate from investing in an individual savings account (ISA). So, even if an investor uses their full ISA allowance for the current tax year, they would still be able to contact HMRC to claim income tax relief on a VCT investment up to £200,000. In addition, any dividends paid out by the VCT are tax-free, so investors don’t have to declare them on their tax returns or their self-assessment forms. This is likely to be another compelling reason behind the growth of VCTs. While dividend payments aren’t guaranteed, many VCTs have a dividend paying target and investors

www.eismagazine.com · January/February 2015

An Introduction for Advisors

can usually choose to take their dividends as income, paid directly into their bank account or reinvest the dividends into the VCT to gain further income tax relief. Finally, if the VCT shares increase in value in the time in which they are held, there’s no capital gains tax to be paid when it comes time to sell them. Investors should note, however, that VCT shares should be held for a minimum term of five years, and if they are sold before then, the investor will have to repay any upfront income tax relief.

Understanding the Risks Any potential investor who is considering the advantages of VCTs should be very clear about the risks too. Regardless of the investment strategy employed, when investing in a VCT, capital is placed at risk. The value of the investment could go down as well as up, so an investor might get back less than they invest. Smaller companies carry significant risks and they don’t all succeed. While they do have potential for high growth, they

EIS Magazine · January/February 2015

generally have a higher failure rate than large companies, which is why a VCT is considered a high risk investment. The performance of a VCT can also be more volatile, which means that over time the value could fluctuate significantly. When it is time to sell there is a chance that the investment will have reduced in value. There are minimum investment limits and VCTs certainly won’t be suitable for everyone. In addition, tax treatment depends on personal circumstances and tax rules may change in future. In the case of VCTs, tax relief also relies on the companies held maintaining their VCT-qualifying status. With all this in mind, any decision to invest should always be taken after an investor has talked to a financial adviser about their personal circumstances. How are VCT Shares Bought and Sold? The usual way to buy shares in a VCT is by applying to the company managing the VCT when they have

VCTs are listed on the London Stock Exchange so you also have the option of buying ‘second-hand’ VCT shares through a stockbroker, just like other stocks

An Introduction for Advisors

an offer open. A financial adviser will do this for you, but with some companies you may be able to apply directly. VCTs are listed on the London Stock Exchange so you also have the option of buying ‘second-hand’ VCT shares through a stockbroker, just like other stocks. You will be able to take advantage of any potential income or growth if you buy second-hand VCT shares but you won’t be entitled to the initial income tax relief. In addition, even though you can’t claim any income tax relief on second-hand shares, the investment would still count towards the initial £200,000 ceiling for income tax purposes. You can sell VCT shares on the London Stock Exchange. However, the initial income tax relief is only retained after the shares have been held for at least five years. Opportunities to sell VCT shares in this way may be limited, and because VCT shares bought on the secondary market do not qualify for 30% income tax relief they invariably trade at a discount to the Net Asset Value (the combined value of the underlying investments). Alternatively, many VCTs buy back their own shares

and may offer you a better price. How often this happens depends on a number of factors, including whether the VCT has enough funds available and it may be unable to purchase them at certain times of the year (for example, closed periods around financial reporting announcements). If you think you may want to sell your VCT shares in the future, you should check whether the fund management company offers a share buy-back scheme, and what discount they typically apply.

A Promising Future So what’s next for the VCT industry, and how likely is it that such growth can be sustained? Of course, as long as VCTs keep pushing to enter the investment mainstream, it’s likely that new VCT managers will emerge, some of which may not have the sort of investment expertise required to successfully invest in smaller companies. It therefore makes sense to talk to a financial adviser who can help investors find a VCT that fits their investment goals, whether they are looking for tax-free income, long-term

growth potential or to preserve their original capital. It has been interesting to note in recent months that while talking about fundraising capacity, many VCT providers have stressed the need to balance the pursuit of new investment money with the need to deliver good returns to existing investors. By its very nature, the number of good quality VCT-qualifying smaller companies is a relatively small pool, but considering the billions of pounds invested in open ended investment companies by UK investors (a large proportion of which will be held in funds with disappointing returns and offering no tax incentives) it doesn’t appear that demand for well-managed VCTs – where the performance of the underlying companies is considered just as important as the tax benefits – will outstrip supply any time soon. EIS

Octopus currently manages more than £400 million for VCT investors and is the largest provider of VCT in the UK. We recommend that investors seek investment advice before investing. Remember that the shares of smaller and/or unquoted companies are likely to have higher volatility and liquidity risk than other types of shares quoted on the London Stock Exchange Official List. Please note that the tax reliefs associated with VCT investments will depend on the individual circumstances of each investor and may be subject to change. The availability of tax reliefs also depends on the investee companies maintaining qualifying status.

www.eismagazine.com · January/February 2015

Investing in Leading Edge Technology Successful investment in young, growing technology companies involves sharing all-important experience and expertise as well as providing essential capital, says Talon Golding, Head of Fund Relations & Sales at Mercia Fund Management

Technology is rapidly transforming our lives, and the scale and pace of that change means that it now represents one of the most exciting areas of opportunity for investors - just take a look at the chart below. What’s more, UK companies are at the forefront of this wave of innovation. Gaming, E-commerce and Fintech Lead the Way It’s clear that the growth potential of the sector is huge. And the key sectors driving this growth, for which the UK can be seen as global leaders, include gaming and gamification, e-commerce and financial technology, widely known as ‘fintech’. You might already know that many major gaming franchises, including Grand Theft Auto and Tomb Raider,

It’s clear that the growth potential of the sector is huge.

EIS Magazine · January/February 2015

have been developed in the UK, and that the country is home to some of the world’s most innovative games developers. But gamification is an extension of this success - applying game design and thinking to non-game contexts, so as to increase engagement in everything from education to employee motivation. Britain’s dominance in the world of online retailing might come as more of a surprise. But yes, the UK was named the world’s leading e-commerce exporter, in a report published last year by OC&C Strategy Consultants in Partnership with Google. Indeed, Hal Varian, Google’s chief economist, went so far as to say that ‘the UK is one of the world’s strongest internet economies’. Praise indeed. ‘Fintech’, a relatively newly coined term, covers a broad range

of technologies developed for the financial services industry, and includes everything from mobile banking to commodity trading systems. Thanks to the City’s clout as a world leading financial centre, combined with the ingenuity of its tech sector innovators, the UK is regarded as a global powerhouse for fintech. Looking ahead, the prospects are equally exciting. New areas of development now coming to the fore include wearable technology, the so-called ‘Internet of Things’ (autonomously communicating appliances and so forth), and virtual reality - all of which are forecast to soar over the next five years. For investors with the requisite knowledge of these industries, there is a wave of emerging stars waiting to be unearthed in UK businesses that are

currently pioneering innovations across these technology-driven growth industries.

The Mercia Method As one of the UK’s leading technology investors, Mercia Fund Management is at the forefront of this surging tide of innovation. Mercia works in partnership with pioneering technology-driven businesses in key growth sectors, aiming to offer both financial support and expertise to help accelerate future growth. By providing a blend of early-stage, development and growth capital, Mercia can invest in a wide range of opportunities whilst being strategically positioned to allocate follow-on capital to stars in the portfolio. As a sector specialist, Mercia offers value not only in the pre-investment discovery, analysis and selection of high-growth opportunities, but, critically, in the support of those companies post-investment through a combination of senior-level experience in operational management and proven expertise in structuring and managing unquoted investments. A Tax-Efficient Hybrid Structure The key here is to offer investors a tax-efficient way to invest in the high

growth potential of the technology sector. And to this end Mercia has now successfully launched five investment funds using a hybrid Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) structure – the latest being Mercia Growth Fund 4, which currently remains open to new investors. The capital growth-focused investment strategy also squeezes the full benefits from the generous reliefs available under both EIS and SEIS. Beyond the upfront relief (30% and 50% respectively), investors have the ability to receive investment returns free from Capital Gains Tax (CGT) and, should a given investment not perform, to restrict the risk to their capital through loss relief. Of course, there are also the potential benefits of Inheritance Tax (IHT) relief and CGT deferral/exemption to consider.

Getting the Right Mix The result is to manage risk for investors seeking to add exposure to young growing technology companies to their overall portfolio, in search of attractive potential returns. The use of both EIS and SEIS has the potential to maximise the efficiency of this strategy. We believe that a sensible approach is to target businesses with proven commercial traction, moderate

capital requirements and competent, experienced management teams. Portfolio balance is also a key element of an effective investment strategy; deploying a blend of early-stage, development and growth capital across a diversified range of businesses. Looking beyond the South East Mercia’s deal flow is enhanced through its partnerships with nine universities, including Warwick, Birmingham and Leicester, and through an extensive presence in the UK technology sector. Mercia stresses that it is a national investor, with a strong focus on the often under-served Midland and Northern territories of the UK. Flexible Access to Further Capital Arguably the biggest issue for a growth enterprise is the ability to raise additional funding to support that growth. It is certainly rare within the technology world for a business to achieve its exit potential within a single funding round. The issue, therefore, is: where does this additional capital come from? Many investment funds are tied to particular stages of business growth – and, as such, for example, they might not be able to support their

Examples of Companies Mercia Invests In Mercia’s investments include companies leading the way in technical innovation and development, notable examples of which include:

nDreams - An innovative computer games developer and publisher, specialising in producing virtual worlds, with current developments focused on virtual-reality headset platforms from Oculus, Sony and Samsung. Warwick Audio Technologies - A designer of highly directional Flat Flexible Loudspeakers (FFL), primarily for use by Original Equipment manufacturers (OEMs) in developing and manufacturing products for public and multiple listener spaces. The company’s patented FFL technology offers OEMs a flat, flexible loudspeaker panel that produces a quality sound performance at low cost. Warwick’s speaker is so thin it resembles a sheet of paper.

Smart Antenna Technologies - SAT has designed, developed and patented a new smart antenna technology that reduces the number of internal antennas required in current and next-generation cellular handsets, from six (typically to include DVB-H, Bluetooth, Wi-Fi, GSM, GPS, 3G multi-bands and 4G LTE) to just a single miniaturised antenna. Although some innovative solutions are already on the market to reduce antenna size and improve performance, SAT has an opportunity to further raise the bar for the industry. www.eismagazine.com · January/February 2015

New areas include wearable technology, the ‘internet of things’ and virtual reality - all forecast to soar over the next five years.

investments beyond a seed level. The result can be that investors are left vulnerable to later-stage investors who may heavily dilute the value of their holdings. In such cases it’s likely that later-stage investors will price their investment proposals heavily, knowing that the company’s options are limited. But the converse is that a business may simply be starved of capital that’s vitally needed for growth.

The Hybrid Advantage Mercia’s hybrid approach, using a combination of EIS and SEIS funds, helps to bridge the total funding requirement for investee companies. Investment takes place in tranches, and the management is required to meet pre-agreed performance objectives before it can receive the next instalment of capital. This approach doesn’t just reduce the risk for investors (since capital is only injected once agreed targets are met) – it also allows management to focus its time and energy on growing the business, not on sourcing additional funding. Mercia has now developed and optimised this approach to followon funding by creating an innovative venture capital model which includes

EIS Magazine · January/February 2015

a later-stage direct investment vehicle that will be able to provide deploy the capital and resources required to rapidly scale, and ultimately to exit, the emerging stars from the portfolio. Taking Scalability To the Next Level This innovative model has been made possible through the advent of Mercia Technologies PLC, which listed on AIM in December, raising £70m. Mercia Technologies, the parent of the wholly owned subsidiary Mercia Fund Management, has been backed by key institutions including Woodford Investment Management, Invesco and Baillie Gifford. The core objective of the business is to invest directly at a later stage

into the Mercia Fund Management portfolio (EIS and SEIS); the result is the potential for a single investment partner solution for highly scalable UK technology companies. As a result, Mercia is able to offer an unrivalled degree of support to investee companies through an enhanced resource base, whilst allowing it to develop even stronger relationships with its portfolio. An in-house incubator is available at Mercia’s offices in Henley-in-Arden, Warwickshire, to help nurture earlystage businesses joining the portfolio. We feel that the combined model also makes Mercia an attractive investment partner, strengthening Mercia Fund Management’s position as a leading technology investor. EIS

The Multi-Manager EIS Platform Kuber Ventures offer investors access to some of the most innovative EIS investment opportunities around, managed by leading Fund Managers and all within a single platform. Investors who qualify for EIS can benefit from: • • • •

30% upfront income tax relief on amount subscribed (up to a maximum investment of £1 million for the 2014/2015 tax year and/or £1 million carried back to 2013/14 tax year); 100% inheritance tax relief after two years (provided the investment is held at the time of death); Capital Gains Tax deferral for the life of the investment on amount subscribed; 100% tax free growth (provided income tax relief has been given and not withdrawn and disposal takes place more than three years after the investment begins to trade);

Investors can choose from a range of EIS funds, creating a single portfolio which is diversified across a number of Fund Managers and underlying portfolio companies, offering targeted spread of between 15-40 companies in a typical portfolio. For more information about Kuber Ventures and its range of EIS Portfolio Funds, please visit www.kuberventures.com

10 Old Burlington Street, London, W1S 3AG T: +44 (0)20 7478 8540 E: info@kuber.uk.com

Kuber Ventures Ltd [FRN 574987] is an Appointed Representative of Sturgeon Ventures LLP which are Authorised and Regulated by the Financial Services Authority. Kuber Ventures Ltd, 10 Old Burlington Street, London W1S 3AG, registered number: 8693809, VAT: 175 9290 69 Telephone: +44 (0) 20 7478 8540; Fax: +44 (0) 20 7009 6601. www.kuberventures.co.uk

Tax and Eligibility Issues An Overview of the Essentials for Advisers

Forgive us if you already know all of what follows in this feature. Indeed, most advisers will. But the ground has been shifting so extensively in recent years that there seems to be no harm in restating a few of the basics. And with the arrival of relative newcomers like SEIS and SITR – which may well prove to be an attractive route for alternative energy investors after April - it doesn’t do any harm to re-state the obvious.

A HNW Alternative to Pension Savings? We’ve said elsewhere in this magazine that a significant proportion of the money now coming into EIS and VCT has been effectively diverted from pension savings by last April’s lowering of the lifetime pensions cap from £1.5 million to £1.25 million. For many, the loss of tax-efficient pension contributions is proving to be amply compensated by the alternative advantages of the upfront 30% tax rebate that comes with eligible EIS investments of up to £1 million; but for some, the 50% rebate on £100,000 worth of Seed Enterprise Investment Schemes (SEIS) may in fact prove better still. Don’t Forget the Other Benefits But that’s only the start, of course. All investors, including those who aren’t diverting pension savings but are simply seeking the better potential growth prospects from SEIS, VCT and the like, stand to benefit from a range of other incentives.

EIS • Funds invested in eligible EIS schemes enjoy 100% exemption from capital gains tax (normally 28%), as long as they are held for at least three years. They are a useful repository for the receipts from any kind of asset disposal, allowing the bearer to defer CGT on any such gains for the life of the investment. • Even capital losses on an EIS investment can be offset against income in the year that the loss arises, or in the previous tax year. For a top rate taxpayer the benefit equates to 35% of the EIS shares’ value – meaning that investor has a downside loss protection of 65 pence in the pound by the time income and capital gains tax relief have been factored in. • Investments in EIS-compliant shares are capable of attracting IHT business property relief (BPR) to the value of the original investment, upon being gifted or upon death 26

EIS Magazine · January/February 2015

Tax and Eligibility Issues

SEIS The Seed Enterprise Investment Scheme regime (SEIS), launched in 2012, focuses mainly on smaller early-stage companies and offers an enhanced 50% income tax relief for individuals who invest in shareholdings of up to 30% of such companies. (As distinct from the 30% relief available to EIS investors.) The annual investment limit is set lower for such investors - £100,000 for individuals and a cumulative £150,000 for companies, subject to certain other restrictions. In certain circumstances SEIS investments in this tax year may attract 50% CGT relief on gains made in the 13/14 tax year, a potential further 14% relief to add to the 50% income tax relief.

SITR SITR, which was introduced last April, is designed to benefit savers who fund so-called social enterprises (community interest companies, community benefit societies or charities), under very much the same sort of qualifying conditions as EIS. Although, as we’ve noted, some providers are examining ways of using them to achieve alternative energy concessions which are being withdrawn from EIS this year. This is a changing situation, and we’ll be keeping you informed on developments. The 30% income tax reliefs resemble those of the existing EIS regime, and the investment limit is also set at £1 million; but the conditions are more complex. The investor cannot own more than 30% of the recipient social enterprise; he cannot be an employee or paid director.

VCT Venture Capital Trusts also qualify for a 30% income tax rebate, but the qualifying period has been set since 2006/2007 at five years instead of three years as previously, and as would be the case with EIS. (There is a proviso that the investor actually needs to have paid this amount of tax.)

As you’d expect, the advantages of BPR schemes are focused solely on inheritance tax Dividends are not liable to income tax on dividends, and there is no tax charged on realised gains, and no CGT upon disposal. The annual subscription limit is £200,000. Because VCTs are listed companies in their own right, they may be purchased in the secondary market as well as when new. That’s a critical difference, but it should be remembered that liquidity may be an issue that may affect prices.

Business Property Relief As you’d expect, the advantages of BPR schemes are focused solely on inheritance tax. There are no ceilings, and the eligibility comes in after two years rather than three, as with EIS. IHT relief is available at 100%, except for a reduced 50% rate on certain land, buildings, machinery or plant, and also on any quoted shares which give control of the company. (The emphasis with PBR is soundly on unquoted investments.) Cash balances sitting in a company will probably not be allowed against IHT after death. BPR does not apply to enterprises that are not-for-profit or do not operate on a commercial basis. Lettings and property management are generally excluded. But farming, woodland management and hunting all count as ‘trading’ for the purposes of the regulations. The main caveat for investors is that HMRC approval of BPR eligibility is constantly vulnerable to review, including retrospectively. Changing circumstances at an eligible company can impact on its BR status, and should be monitored carefully. EIS

SITR

SEIS

EIS

Maximum investment per individual

£1 million

£100,000

£1 million

Income tax relief

30%

50%

30%

Capital gains tax free?

Yes

CGT deferral?

Yes

CGT relief?

50%

Minimum holding period

3 Years

Maximum per investee entity

€344,827 (c£285,000) over 3 years

£150,000

£5 million in any 12 months

Unique benefit

Can apply to debt instruments as well as shares

Highest rate of relief and CGT holiday

Highest investment limit

Source: Baker Tilly

www.eismagazine.com · January/February 2015

SUSTAINABLE TECHNOLOGY INVESTORS APPROVED EIS FUND 3 £10 Million UK Sustainable Energy Fund Your attention is drawn to the Important Notice at the end of this document and the risk warnings contained therein. Words and expressions defined in the Information Memorandum shall have the same meaning as in this document

Compelling investment opportunity in the sustainable energy sector STIL’s third EIS fund focused on UK sustainable energy assets A management team with a 45% IRR track record The Sustainable Technology Investors Approved EIS Fund 3 (the “Fund”) offers exposure to a portfolio of sustainable energy companies operating within the anaerobic digestion (“AD”) and run-of-river hydro (“Hydro”) sub sectors, targeting superior risk adjusted returns with an emphasis on downside mitigation, whilst taking advantage of EIS tax incentives.

The Fund Manager Sustainable Technology Investors Ltd (‘STIL’) is based in London and authorised and regulated by the Financial Conduct Authority. STIL manages or advises on private equity investments and committed funds of over £113 million in the sustainable energy, technology and energy efficiency sectors. STIL has a sector specialist management team with a strong investment and development track record, particularly in AD and Hydro. STIL has a highly experienced Investment Team with a verified track record of 45% IRR from 55 sustainable energy and technology investments over 29 years.

Key Reasons to Invest  Targeted cash returns of £1.25 for a net 70p invested (79% uplift). This would represent a 16% IRR over the 4 year period, equivalent to a 30% IRR to an additional rate tax payer entitled to EIS income tax relief.  Downside risk mitigation sought at 90% of the subscription price with low cyclicality, predictable cash flows and asset backing whilst maintaining the potential for good yields and capital gain on exit.  HMRC Approved EIS Fund – When 90% invested in first 12 months investors can claim income tax relief as if shares were subscribed for in the tax year 2014/15.  A proven Fund Manager who has already fully invested STIL EIS Fund 1 and invested more than 90% of STIL EIS Fund 2 within 8 months of fund close.  A management team with years of investment and development experience across AD and Hydro, an enviable track record and access to a strong pipeline of investment opportunities.  An exciting opportunity to access investment in the UK sustainable energy sector. Key features include revenues supported by long-term government policies and subsidies such as Feed-in Tariffs (“FITs”) and the Renewable Heat Incentive (“RHI”), whilst targeting attractive investment returns due to increasing energy demand and growing resource scarcity.

Investment Team Gordon Power – Chairman, 30 years’ private equity investment and fund management experience. An overall track record of 29% IRR from 239 investments and a 45% IRR from 29 sustainable investments. Jim Totty - Managing Partner, 21 years’ experience in sustainable and clean technology, with 13 years private equity investment experience. A 30% IRR from 20 sustainable private equity investments. Nick Pople - Managing Partner, 22 years’ sector experience across sustainable energy and technologies, with 17 years private equity investment experience. A 36% IRR from 23 sustainable private equity investments.

Operating Partners Firglas Ltd (“Firglas”) – a specialist renewables project developer and operator. Sourced and now developing, in partnership with STIL, an AD plant and two Hydro schemes in the UK. Fredrik Adams – Founder and CEO of Firglas. Has worked with STIL since 2009 when he formed Adgen Energy Ltd, since acquired by Tamar Energy, now one of the largest AD operators in the UK. Simon Cordery – Operating Partner who has worked closely with STIL since 2010. Significant renewable energy development experience, particularly in AD. Founder of Energy and Environment practice with Savills in 2006.

EIS Tax Reliefs  Income tax relief at 30%  Tax-free capital gains when shares sold  Capital Gains Tax deferral  Business Property Relief  Loss relief against taxable income Tax reliefs are dependent on investor’s individual circumstances and are subject to change. The availability of tax reliefs also depends on investee companies maintaining their qualifying status.

STIL EIS Fund 3 - Investment Strategy  An existing platform of two businesses available for co-investment and a strong pipeline of development assets.  Aim to provide Investors with a diversified portfolio of investments which has a lower correlation to stock market movements.  Focus on AD and Hydro – the sub-sectors where FITS and EIS relief can still be combined, the core investment focus of STIL EIS Fund 1 and Fund 2, and the areas where the Fund Manager has in-depth experience, an extensive track record and a pipeline of investment opportunities.  Downside risk mitigated by targeting asset backed companies with contracted third party revenues, proven technologies with warranties and UK government guaranteed FITs and possibly RHI revenues.

Sustainable Technology Investors Approved EIS Fund 3 Fund Terms Fund Size

£10 million

Fund Type

HMRC Approved complying EIS Fund

Investment Focus

Anaerobic digestion (AD) and run-of-river hydro (Hydro)

Closing Date

02 April 2015

Target Return

£1.25 on a net 70p invested

Exit Strategy

Liquidity targeted at 4 years

Initial Charges

2% (plus up to 3% adviser fee if applicable)

Annual Charges

2% AMC (plus 0.5% admin charge)

Performance Incentive Fee Zero until return hurdle of £1.16 (in respect of every £1 invested) is reached 4p catch up between £1.16 and £1.20

Example Investee Company STIL EIS Fund 1 and Fund 2 invested in Black Dog Biogas Ltd, a developer, owner, operator of AD plants in the UK. Its first project is a 499kW AD plant on the Isle of Wight. There is the potential to expand the plant up to 1MW in 2015 with further investment.

20% on returns between £1.20 and £1.25 30% on returns above £1.25

For further information please contact LGBR Capital: Tel: Email: Web:

020 3195 7100 sales@lgbrcapital.com www.lgbrcapital.com

Black Dog’s Isle of Wight AD Plant under construction

Important Notice This document has been issued and approved as a financial promotion for the purpose of Section 21 of the Financial Services and Markets Act 2000 (“FSMA”) by Sustainable Technology Investors Limited (“STIL”), which is authorised and regulated by the Financial Conduct Authority (“FCA”), under reference number 221604 and whose registered office is at 31A St James’s Square, London SW1Y 4JR. STIL has taken all reasonable care to ensure that this document is fair, clear and not misleading but the statements of opinion or belief contained in this document regarding future events constitute STIL’s own assessment and interpretation of information available to it at the date of issue of this document and no representation is made that such statements are correct or that the objectives of the Fund will be achieved. No reliance is to be placed on the information contained in this document. It is important that prospective investors read and understand fully the Information Memorandum relating to the Fund, dated November 2014, and the risks involved with the arrangements described in this document (which is only a summary of some of the information in the Information Memorandum). The opportunity described in this document is NOT suitable for all investors. Key risks are explained in the Information Memorandum and should be carefully considered. Investment in EIS qualifying companies are considered to be high-risk, including illiquidity, lack of dividends, loss of investment and dilution. You should be aware that shares and income from them may go down as well as up and you may not get back the amount originally invested. Past performance is not a reliable indicator of future performance and may not be repeated. An investment in smaller and unquoted companies carries a higher risk than many other forms of investment. The Fund’s investments are likely to be illiquid and difficult to realise. Prospective investors should regard an investment in the Fund as a long term investment; realisation of the original investment will be piecemeal and, in practice, may extend beyond 4 years. Accordingly your capital is at risk and you may lose all the money you invest. Tax reliefs are dependent upon an investor’s individual circumstances and are subject to change. Prospective investors should seek their own independent advice and then rely on their own independent assessment of the Fund; nothing in this document constitutes tax, financial, legal or investment advice. STIL is unable to provide financial, investment or tax advice. This document does not constitute, and may not be used for the purposes of, an offer to or invitation to treat by any person in any jurisdiction outside the United Kingdom. This document and the information contained in it are not for publication or distribution to persons outside the United Kingdom.

Open Offers Highlighting some of the key tax efficient investment offerings currently available to IFAs

Investment Key:

EIS

SEIS

EIS Open

22/12/2014

31/03/2015

Minimum investment: £25,000*

VCT

OEIC

IHT

BPR

Motion Picture Capital - HMRC-approved EIS Fund Motion Picture Capital provides a platform for the development, financing and distribution of film & television content as part of the Reliance Entertainment Group. Other Reliance companies include Steven Spielberg’s DreamWorks Studios. This HMRC-approved EIS Fund offers investors access to a robust capital preservation strategy with a unique charging and profit distribution structure. A direct equity participation in this slate of high quality film & television projects of a truly global scale adds significant upside potential. As with all investments, there is the potential for risk as well as reward: investors may not get back what they put in. EIS tax relief depends on individual’s circumstances and may be subject to change. * (Inc. initial charge)

T. 0207 025 8199 E. info@motionpicturecapital.com www.motionpicturecapital.com

EIS Open

Now

N/A

Amount to be Raised: Unlimited

T. 020 7361 0212 E. fundenquiries@mmcventures.com www.mmcventures.com

EIS Magazine · January/February 2015

MMC Ventures - EIS Fund The MMC Ventures EIS Fund offers investors exposure to a portfolio of hard-toaccess fast growing private companies, combing real capital upside potential with generous EIS tax reliefs.

Founded in 2000, MMC is regularly rated as one of the top 5 most active venture investors in the UK, investing circa £20 million per annum in a combination of new deals and follow-on capital for existing portfolio companies. An investor in the MMC EIS Fund can expect a portfolio of 8-10 companies within 12-15 months of subscribing. The MMC EIS Fund is categorised as a generalist product but they have a clear investment focus on technology-enabled sectors where the UK is a world leader - particularly financial and business services, business software, digital media and e-commerce. MMC’s fundamental approach is to invest on the commercial merits of each transaction, viewing the EIS tax benefits as highly desirable but not the reason to invest. This approach is reinforced by their policy of co-investing their EIS Fund alongside other funds they manage that do not qualify for EIS tax relief.

Open Offers

EIS

Kuber Ventures Multi Manager Platform

Open

Kuber Ventures Multi-Manager EIS Platform, has a range of portfolios which are each diversified across a number of Fund Managers. Through a single application and depending on the Portfolio selected, our Portfolios allow investors to create a diversified spread of up to 40 qualifying EIS investments.

Now

Evergreen

Minimum Subscription: £20,000

Investors may select individual funds or choose to achieve further diversification by investing in one of the Kuber Portfolios available. Our Portfolio choices include:

• Renewable Energy Portfolio (Fund of 3 Funds) – Deadline 31st March for current tax year

• Exit Focused Portfolio (Fund of 4 Funds) – Deadline 31st March for current tax year • Diversified Portfolio (Fund of 9 Funds) – Evergreen with a regular share allotments • Venture Growth (Fund of 5 Funds) – Evergreen with regular share allotments • SEIS Portfolio (Fund of 2 Funds) – Deadline 31st March for current tax year

Octopus Investments / The Octopus Enterprise Investment Scheme Octopus is the largest provider of EIS solutions in the UK+, with more than £600 million invested across its EIS range. Octopus EIS will invest in energy companies, including reserve power businesses and companies generating renewable energy from anaerobic digestion. These companies use proven technologies, have strong capital preservation characteristics, and benefit from government-backed support mechanisms. Of course, Octopus EIS investors may also benefit from valuable tax incentives available to EIS investors – details are in our product literature at octopusinvestments.com/eis.

The success of Octopus EIS, currently on tranche 18, is built on the strength of the exclusive relationships Octopus has with development partners. Previous tranches of Octopus EIS invested in solar energy, an area in which Octopus moved from being a new entrant in the market to the largest investor in the UK*. Just as Octopus worked with an experienced development firm for solar (Lightsource Renewable Energy), Octopus has similar exclusive partnerships with experienced partners to invest in EIS companies that own and operate anaerobic digestion and reserve power plants. + Source: Tax Efficient Review, 2014 *Source: Bloomberg New Energy Finance, Total UK installed capacity MWP, March 2014

T. 020 7478 8540 E. info@kuber.uk.com www.kuberventures.co.uk

EIS Open

21/01/2015

25/03/2015

Amount to be Raised: £20m

T. 0800 316 2067 E.salessupport@octopusinvestments.com www.octopusinvestments.com/eis

EIS

Peto - One To Watch

Open

Peto was appointed in September 2014 to support the Trust in the delivery of savings from the off-contract spend of around £38million per year.

Late Feb 2015

TBC

Amount to be Raised: £ TBC

Three months into service delivery the Peto team, are achieving 12% realised savings against a target of 4% on prior spend. This is a strong result, reinforced by huge opportunity to increase the scope of the throughput which has been lower than forecast to date. Peto has been working with Barts Health procurement team, budget holders, and the Peto marketplace, peto.co.uk. About Peto Active in over 200 NHS trusts, Peto connects public sector buyers and private sector sellers via an easy-to-use online marketplace, and where necessary, with additional resources to reduce spend via its insourcing procurement service.

T. 01983 282925 E. tom.death@ifmackinnon.co.uk www.peto.co.uk

www.eismagazine.com · January/February 2015

Open Offers

EIS Open

27/10/2014

27/03/2015

Minimum Investment: £10,000

Ingenious Renewable Energy EIS 2014/15 An opportunity to invest in a portfolio of EIS qualifying companies operating renewable energy generation businesses or providing services to support them. Since 2012, we have successfully launched three renewable energy EIS investment opportunities and as before, investors will benefit from EIS reliefs and uncapped upside potential. We are specialists in the renewable energy sector having raised over £220 million to date, applying our broad expertise to source attractive investment opportunities for our investors.

T. 020 7319 4291 E. hello@ingeniousinvestments.co.uk www.ingeniousinvestments.co.uk

EIS Open

22/09/2014

27/03/2015

Minimum Investment: £10,000

Ingenious Pathé Plus Film EIS Following the successful launch of the first Ingenious Pathé EIS Film Fund in 2012, Ingenious is delighted to return to the market with a new discretionary managed service investing in a portfolio of HMRC EIS qualifying companies producing independent feature films. Pathé is the UK’s leading independent film distribution and sales company, founded in 1896 and with a first class record in UK and French distribution and international sales. Pathé’s major international hits include Slumdog Millionaire, The Queen, The Iron Lady and Philomena.

T. 020 7319 4291 E. hello@ingeniousinvestments.co.uk www.ingeniousinvestments.co.uk

EIS Open

06/01/2015

27/03/2015

Minimum Investment: £10,000

T. 020 7319 4291 E. hello@ingeniousinvestments.co.uk www.ingeniousinvestments.co.uk

EIS Magazine · January/February 2015

Shelley Media EIS Spring 2015 An exciting opportunity to invest in Enterprise Investment Scheme (EIS) qualifying companies developing and producing film and television content for the global market. The Shelley Media strategy has raised over £150 million of qualifying investment, producing independent films and TV programmes for distributors such as Warner Bros., Sony Pictures and HBO. Highlights include Carol starring Academy Award winner Cate Blanchett, What We Did On Our Holiday with Rosamund Pike and David Tennant (Doctor Who), Mr Turner with Timothy Spall (Harry Potter) and Locke, starring Tom Hardy.

Open Offers

EIS

Calculus Capital EIS Fund 2015

Open

Calculus Capital is a specialist in creating and managing private equity funds for individuals. A pioneer in the Enterprise Investment Scheme (EIS) space, Calculus launched the UK’s first approved EIS fund in 1999 and has gone on to launch 14 further funds. Calculus seeks capital appreciation from dynamic, established private UK companies across a multitude of sectors.

04/06/2014

03/04/2015

Amount to be Raised: £25m

Calculus Capital’s experienced investment team, diligent investment process and ‘hands on’ approach has resulted in an impressive track record of investment success, achieving 20 exits to date with an average ROI of 3.4x – exclusive of tax reliefs. Calculus Capital is authorised and regulated by the Financial Conduct Authority.

T. 020 7493 4940 E. info@calculuscapital.com www.calculuscapital.com

EIS Open

Par Syndicate EIS Fund The Par Syndicate EIS Fund is an evergreen EIS fund, unapproved by HMRC, investing in innovative high growth potential companies with a view to generating capital gains. The fund, managed by Par Fund Management Limited, made its first investment in December 2012. The fund’s mandate is to invest alongside (and on the same terms as) business angel syndicates, and usually, but not exclusively, co-invests with the Par Syndicate, a leading business angel syndicate that has been investing since 2009. The fund is currently open to elective professional clients only. Par Equity is a boutique investment firm established in 2008. It pursues a distinct investment philosophy of “intellectual and financial capital” that hinges on combining the best features of business angel groups and professional venture capital investment practice. Key to this is the involvement of a large and active business angel syndicate whose members add significant value to the identification, evaluation and post-investment management of investments that they and the Par Syndicate EIS Fund invest in, giving Fund investors the opportunity to invest in rigorously selected companies on the same terms as industry and sector insiders.

Puma EIS employs an investment strategy similar to that successfully deployed by the Puma VCTs and aims to provide investors with downside protection in a carefully managed portfolio. Building on Puma’s established track record in tax efficient investments, Puma EIS targets asset-backed businesses aiming to provide downside protection for investors through a portfolio exposure to HMRC preapproved companies.

Successful Deployment: Puma EIS was the largest fundraise of any new EIS strategy “seeking lower risk” launched in 2013/14 tax year. All funds raised were successfully deployed into companies with HMRC Advanced Assurance before the end of the tax year end. Allotment Dates: The discretionary management service has no fixed closing date. There will be quarterly allotments with an allotment shortly in advance of the tax year each year. Strong Track Record: Building on the market leading track record of the Puma VCTs which operate a similar asset-backed investment strategy. Realisations: It is envisaged that investments in Qualifying Companies will be realised within 3 to 5 years. Investment Size: Minimum subscription is £25,000 with no upper limit.

Evergreen

Amount to be Raised: Unlimited

T. 0131 556 0044 E. info@parequity.com www.parequity.com

EIS Open

PUMA INVESTMENTS - PUMA EIS

Now

January 2014

Quarterly

Amount to be Raised: £25m

T. 020 7408 4070 E. info@pumainvestments.co.uk www.pumainvestments.co.uk

www.eismagazine.com · January/February 2015

Welcome to London Capital Club

Your space in the heart of the City for meeting, dining and networking

A Space for Meeting

Events & Networking

London Capital Club is the perfect location for meeting with clients over an informal coffee, a spot of lunch, or in one of our sumptuous private meeting spaces.

We host a range of networking events, as well as keynote speaker events. We have spaces for members’ events and can accommodate up to 150 delegates in a variety of room set-ups.

London and Beyond

Restaurant Fine Dining

Club members receive the same exceptional service in over 250 clubs worldwide, which make up the IAC network, as well as access to further benefits, such as discounts at some of the country’s best golf courses and hotels.

Enjoy the brasserie-style ambience in our public bar and restaurant, @15, formal dining in our members’ restaurant The Walbrook Grill, or hold a private function in one of our historic rooms for an outstanding fine dining experience.

We look forward to welcoming you to London Capital Club T: 0207 717 0088 E: enquiries@londoncapitalclub.com A: 15 Abchurch Lane, London EC4N 7BW W: www.londoncapitalclub.com Find Us:

Bank

Cannon Street

Monument

Open Offers

EIS

Oxford Capital Growth EIS

Open

Through the Oxford Capital Growth EIS, investors can build a portfolio of shares in 6-10 small or medium-sized British companies over a period of roughly 12 months. Each investment should be eligible for EIS reliefs, including 30% income tax relief and tax-free gains. Investee companies could be operating in a wide range of industries – past investments have spanned sectors from digital marketing to sustainable agriculture – but they will all be businesses that have potential to grow rapidly. Oxford Capital works closely with the investee companies, helping to accelerate commercial development with the aim of achieving a profitable exit, usually through either a trade sale or a stock market listing. The Oxford Capital Growth EIS targets a return of 2.5x the amount invested (net of applicable fees and including the impact of EIS income tax relief), aiming to return the majority of proceeds 4-6 years after initial investment.

Now

Evergreen

Amount to be Raised: Unlimited

T. +44(0)1865 860 760 E. info@oxcp.com www.oxcp.com

EIS

Oxford Capital Infrastructure EIS

Open

Through the Oxford Capital Infrastructure EIS, investors can benefit from EIS tax advantages including 30% income tax relief and tax-free gains, by acquiring shares in one or more EIS-qualifying companies that own and operate infrastructure assets. Oxford Capital aims to invest in companies capable of generating stable revenues through long-term contracts, producing returns of £1.10-£1.15 per £1 invested (net of applicable fees and not including the impact of EIS income tax relief). The current investment focus of the Infrastructure EIS includes anaerobic digestion, hydroelectric power and small-scale power generation. Shares are normally purchased for the investor within 4-6 weeks of submission of their subscription. EIS3 certificates are available on average 12 months after purchase of shares. Oxford Capital will aim to sell the shares to a strategic acquirer and return capital to investors after the fourth year of the investment.

Now

Evergreen

Amount to be Raised: Unlimited

T. +44(0)1865 860 760 E. info@oxcp.com www.oxcp.com

EIS

Enterprise Invesment Partners - The Imbiba Fund

Open

The Fund will invest in a diverse portfolio of up to 5 businesses in the Leisure & Hospitality sector in Central London, with the award-winning Imbiba Team as asset managers. Imbiba’s outstanding track record boasts 8 EIS exits realised with an IRR of 35% (excluding EIS tax relief). Significant personal investment by both Imbiba and Enterprise (EIP) of up to £200,000 into each investee company. The offer comprises 2 investment tranches of £10m in current tax year 2014/15 and £15m in 2015/16 with an industry leading performance hurdle rate at £1.50 per £1.00 invested.

15/01/2015

31/03/2015

Amount to be Raised: £10m

T. 020 7487 8282 www.enterprise-ip.com

www.eismagazine.com · January/February 2015

Open Offers

EIS Open

Now

02/04/2015

Amount to be Raised: £10m

T. 020 3195 7100 E. sales@lgbrcapital.com www.lgbrcapital.com

EIS Open

20/01/2015

31/12/2015

Amount to be Raised: £4m

Sustainable Technology Investors Approved EIS Fund 3 Sustainable Technology Investors Approved EIS Fund 3 (STIL EIS Fund 3) is offering exposure to a portfolio of sustainable energy companies within the Anaerobic Digestion (AD) and Hydro sub-sectors, targeting superior risk adjusted returns with an emphasis on downside mitigation, whilst taking advantage of EIS tax incentives. STIL EIS Fund 3 is targeting cash returns to investors of £1.25 for a net 70p invested (79% uplift), representing a 16% IRR, equivalent to a 30% IRR to an additional rate tax payer entitled to EIS income tax relief. All subscriptions received by 2 April 2015 will be invested in the current tax year, allowing EIS Income Tax Relief to be claimed in the 2014/15 tax year or carried back to the 2013/14 tax year. This is STIL’s third EIS Fund with a similar focus, from a sector specialist management team with strong investment and development track record, particularly in AD and Hydro. STIL has a highly experienced Investment Team with a verified track record of 45% IRR from 55 sustainable energy and technology investments over 29 years and an existing platform of two EIS qualifying businesses available for co-investment and a strong pipeline of development assets.

This financial promotion has been approved by Sustainable Technology Investors Limited, which is authorised and regulated by the Financial Conduct Authority (“FCA”) with firm reference number 221604. This promotion is directed only at advisers who are authorised and regulated by the FCA. Investments in funds such as STIL EIS Fund 3 are high risk, and investors may not get back all the money they put in.

The Wine Enterprise Investment Scheme Limited An investment combining the asset class of fine wine and its unique characteristics with the tax advantages of EIS. The Company commenced trading fine wines in 2012, currently has over £3.5m under management and, since already trading, can issue EIS3s promptly. The team, with a 60+ years combined wine investment trackrecord and over £35m of assets under management, are widely recognized as the fine wine investment experts. This EIS offer is targeting a return of £1.21 after 3 years for each £1 gross invested. Closing rounds 30 January, 27 February and 31 March and quarterly thereafter. Minimum investment £10,000 and 3% available to intermediaries.

T. +44 020 7478 0901 E. adc@wineinvestmentfund.com www.wine-eis.com

EIS Open

01/01/2015

31/03/2015

Amount to be Raised: £2,000,000

T. 01983 282925 E. X-Wind@ifmackinnon.co.uk www.x-windpower.co.uk

EIS Magazine · January/February 2015

X-Wind Power X-Wind has developed a ground-breaking Vertical Axis Wind Turbine aimed at the medium scale renewable energy sector. The team has drawn on its extensive experience gained developing the world’s largest wind turbines at Vestas. Since its launch in 2012 X-Wind’s core patented technology has won five high-profile technology awards.

X-Wind visible sales pipeline exceeds £40 million. The company is also securing commercial commitments for its 80kW turbines from customers in need to secure energy pricing and supply. X-Wind has secured a partnership with the UK’s largest electricity user. To date X-Wind has raised £1.7 million in grants and £0.3M of equity. X-Wind currently requires £2.0M of equity funding to complete the production of their first full-scale 80kW turbine.

Open Offers

EIS

Deepbridge - Hydro EIS

Open

The Deepbridge Hydro EIS is a discretionary managed portfolio service; representing the last opportunity for UK taxpayers to invest in EIS-qualifying investee companies generating long term, stable and predictable returns from the operation of hydroelectricity generating projects in the UK. The core proposition of the investee companies identifies, through rigorous due diligence and engagement, attractive projects in the hydroelectricity sector of the UK renewable energy industry. The proposition involves the acquisition of established projects as well as construction and development projects; in which case proven engineering, procurement and construction contractors will be appointed with oversight by the Investment Manager. By investing in such asset-backed opportunities that benefit from contractual revenues available under the Renewables Obligation, the EIS seeks to ensure an enduring focus upon capital preservation as well as generating stable and predictable returns for the investor. The target return for the Deepbridge Hydro EIS is 125p returned for every 100p invested, over 3-4 years. To ensure maximum tax efficiency for the investor, the Deepbridge Hydro EIS is entirely investor-fee free at point of investment. The value of an investment may go down as well as up and investors may not get back the full amount invested. Investments in small unquoted companies carry an above-average level of risk.

Deepbridge - Technology Growth EIS

01/11/2014

05/04/2015

Amount to be Raised: £15m

T. 01244 893182 www.deepbridgecapital.com

EIS Open

The Deepbridge Technology Growth EIS represents an opportunity for investors to participate in a portfolio of actively-managed growth-stage technology companies, taking advantage of the potential tax benefits available under the Enterprise Investment Scheme. The Deepbridge Technology Growth EIS is a diversified portfolio of actively managed high-growth companies seeking commercialisation funding. The Deepbridge EIS invests in companies that have a proven technology, clear intellectual property and are operating in a high growth/high value market sector. The Fund is focused on investing in high growth companies that are seeking to commercialise and expand, specifically in three sectors: • Energy & resource innovation; including waste water treatment and conservation, advanced materials and renewable energy generation technologies; • Medical technology; such as medical and surgical instrumentation, devices and diagnostics; • IT-based technology; particularly Enterprise Application Software and Software as a Service. The target return for the Deepbridge Technology Growth EIS 22.9% p.a. over a minimum of three years; representing mid-case capital growth of 160p returned for every 100p invested. To ensure maximum tax efficiency for the investor, the Deepbridge EIS is entirely investor-fee free at point of investment.

Guinness - Sustainable Energy EIS 6

Guinness has been granted exclusivity on two hydro projects of 2MW and 1MW respectively. The projects have received planning permission, grid connection offers and environmental approvals and are ready for construction subject to final due diligence and investment committee approval. The Investment Manager is sourcing additional hydro projects for the investment portfolio.

N/A

Amount to be Raised: Unlimited

T. 01244 893182 www.deepbridgecapital.com

EIS Open

Guinness EIS 6 has been established to make investments in UK Sustainable Energy companies that are eligible for EIS tax reliefs. The investment objective of Guinness EIS 6 is to deliver tax-free investment returns of over £1.20 per £1.00 invested, net of all fees, in addition to £0.30 of EIS Income Tax Relief. Subscriptions received by 1 April 2015 will be invested in the current tax year. EIS Income Tax Relief can be claimed in the 2014/15 tax year or carried back to the 2013/14 tax year.

01/08/2013

Now

02/04/2015

Amount to be Raised: £10m

T. 020 7222 3475 E. eis@guinnessfunds.com www.guinnessfunds.com/eis

www.eismagazine.com · January/February 2015

Open Offers

EIS Open

Now

06/04/2015

Amount to be Raised: £10m

T. 020 7222 3475 E. eis@guinnessfunds.com www.guinnessfunds.com/eis

EIS Open

26/01/2015

SEIS Close

30/04/2015

Amount: Min £3m - Max £8m

T. 0330 223 1430 E. Talong@merciafund.co.uk www.merciafund.co.uk

EIS

SEIS

Open

02/09/2014

01/04/2015

Amount to be Raised: £15m

T. 020 7416 7780 E. contact@downing.co.uk www.downing.co.uk

EIS Magazine · January/February 2015

Guinness - AIM EIS 2015 Guinness AIM EIS 2015 has been established to make investments in AIMlisted companies that are eligible for EIS tax reliefs. The investment objective of Guinness AIM EIS 2015 is to deliver tax-free investment returns of over £1.30 per £1.00 invested, net of all fees, in addition to £0.30 of EIS Income Tax Relief. The Investment Manager will invest in a portfolio of AIM listed companies that it believes will offer capital gain underpinned by sound financial assumptions and robust management teams. Guinness AIM EIS 2015 is an Approved Fund for EIS purposes. Investors will be able to claim Income Tax Relief in the 2015/16 tax year, or carry back to the 2014/15 tax year. In addition, as an Approved Fund, the process of claiming EIS Income Tax Relief is greatly simplified. Rather than receiving an EIS 3 certificate for each investment made, Investors will be issued with a single EIS 5 Certificate with which EIS Income Tax Relief and other tax reliefs can be claimed. Investors can expect to receive their EIS 5 Certificate by spring 2016.

Mercia Fund Management - Mercia Growth Fund 4

(75% EIS, 25% SEIS)

Mercia Fund Management, a wholly owned subsidiary of Mercia Technologies PLC, is a leading investor in UK technology; specialising in the commercialisation of businesses with high growth potential across a range of technology driven sectors in which deep expertise is held. Mercia Growth Fund 4 will utilise the hybrid structure of Mercia’s previous four tax efficient funds, combining EIS and SEIS, to invest in a diversified portfolio of innovative technology companies. The hybrid approach aims to offer an optimal balance between capital growth, portfolio risk and time horizon whilst maximising the tax advantages available. Mercia has partnerships with nine universities, including Warwick, Leicester and Birmingham, and has a leading industry position which ensures a consistent, high quality pipeline of deal flow opportunities. Mercia Growth Fund 4 will target exit realisations between three and seven years. Mercia Technologies PLC, which listed on AIM in December 2014 raising £70m, aims to provide later stage capital to the emerging stars in the Mercia Fund Management portfolio, offering a unique venture capital model with key strategic advantages for investors.

Downing Growth 4 – EIS & SEIS Downing Growth 4 invests in high risk, high potential return investment opportunities, whilst also providing access to attractive EIS and/or SEIS tax reliefs (including 30%-50% income tax relief). It has a focus on early-stage UK technology companies, and its principal sectors of interest are consumer internet & mobile, enterprise software, and industries that are becoming more dependent on technology, such as healthcare, education, finance and defence. Since its launch in September 2014, it has invested in a portfolio of seven companies, with more currently being completed. Investors’ tax forms are expected within six months of investing in the fund. Investments come from a variety of sources and we have relationships with several joint venture partners. In particular, we are the preferred partner to the ‘Defence, Science & Technology Laboratory’ at Porton Down - a division of the Ministry of Defence - which provides us with access to opportunities coming out of this group. The fund is managed by Downing Ventures, a division of Downing LLP, and is led by Matt Penneycard, who has been investing in this space for over ten years, both in the UK and the US. Our team includes an individual based in the US, which is to the benefit of our portfolio companies, many of whom seek to expand in that direction.

4 EXCITING EIS / SEIS OPPORTUNITIES BROUGHT TO YOU BY INNVOTEC Anglo Scientific EIS 2015 The seventh annual EIS Fund from the Innvotec / Anglo Scientific collaboration provides further opportunity for private investors to invest behind the well regarded, specialist and dedicated team of technology entrepreneurs that is Anglo Scientific, under a discretionary management agreement with Innvotec, one of the UK’s longest established VC’s backingangloscientific opportunities in the broad technology sector. C R E A TING SOLU TIONS

Anglo Scientific has built a portfolio, all EIS qualifying, of highly promising tech-enabled companies and Anglo Scientific 2015 EIS, like the predecessor funds, provides the opportunity to invest in five or six of these companies. Performance across the earlier funds is impressive, an average gain on portfolio cost of 77% equating to a notional IRR across all Funds of 19%, with no fund being valued below cost.

Startup Funding Club SEIS 2015 The second annual SEIS Fund from the Innvotec / Startup Funding Club collaboration, the first having been deployed across a well-diversified, fifteen company portfolio. Startup Funding Club is one of the most successful “boutiques” working with companies seeking seed and early-stage finance, especially those companies that own proprietary intellectual property (IP) capable of being exploited globally and whose founders possess the stamina and knowhow to meet the challenge. The Startup Funding Club’s network ensures that opportunities are sourced from many of the UK’s best regarded “incubators and accelerators”. Whilst the portfolio will have a technology-bias, it will also include product based companies and those in the food sector. Integral to the success of the Fund is a mentoring programme in support of the entrepreneurs.

Odyssey Mission SEIS 2015 UK based private investors have a novel opportunity to invest in the Innvotec-managed Odyssey Mission 2015 SEIS Fund, a portfolio of early stage businesses led by Asian Entrepreneurs. Investors have the prospect of strong capital appreciation whilst helping an “affinity group” and obtaining attractive personal tax reliefs in so doing. The Fund is geared to providing start-up /early stage funding and mentoring support to the best of the next generation of Asian graduate entrepreneur that wish to build their businesses in the entrepreneurial-friendly United Kingdom, some of whom will require a Tier 1 graduate entrepreneur visa so to do. The “Odyssey Mission” itself is a big project of which the SEIS Fund is the startpoint.

OION SEIS 2015

2015

SEIS FUND

The OION 2015 SEIS Fund is an Innvotec-managed growth fund, providing private investors with an opportunity to invest in a portfolio of early stage businesses located in Oxfordshire and its surrounds, whilst offering the prospect of strong capital appreciation and at the same time accessing attractive personal tax reliefs. The companies that will form the OION 2015 SEIS Fund will use the proceeds of investment to advance them on their business growth curve and it is at these earliest stages of commercial exploitation that there is the potential to generate significant capital appreciation. The Fund benefits from the participation of Oxford Investment Opportunities Network (OION) in generating quality dealflow and the provision of mentors to support the entrepreneurs.

For full details on any of the above EIS / SEIS Funds or any other information please contact Innvotec on:

Tel: +44 (0) 20 7630 6990

Email: info@innvotec.co.uk

Web: www.innvotec.co.uk

Issued and approved by Innvotec Limited, Business Design Centre, Suite 310, 52 Upper Street, Islington, London, N1 0QH Innvotec Limited is a registered company in England & Wales. Registration Number: 2030086 Innvotec Limited is Authorised and regulated by the Financial Conduct Authority. VA0115

Open Offers

EIS

SEIS

Open

January 2015

N/A

Amount to be Raised: £5m

T. 020 7873 2122 E. seis@jensonsolutions.com www.jensonfundingpartners.com

EIS Open

January 2015

SEIS Close

Evergreen

Amount to be Raised: Unlimited

T. +44 (0)845 512 1000 E. nicolajohnston@chfmedia.com www.chfenterprises.co.uk

SEIS

EIS

Open

01/11/2012

N/A

Amount to be Raised: Unlimited

T. 01865 784 466 E. info@oxfordtechnology.com www.oxfordtechnology.com

EIS Magazine · January/February 2015

Jenson Funding Partners - SEIS & EIS Fund 3 We are pleased to follow-up our first two funds with a combined SEIS and EIS Fund (‘Fund 3’). Our offering allows investors to choose whether they want to invest solely via SEIS or EIS or to split their funds across SEIS and EIS investments. The Fund aims to target exciting new innovative and disruptive technologies to be nurtured alongside existing investment opportunities that require follow-on investment to fully exploit commercialization of a proven business model. At Jenson we aim to offer these businesses far more than just funding. To date, we have actively advised entrepreneurs to re-evaluate business models, reduced projected costs and introduced potential executives, partners, customers and suppliers as part of the value added service we provide. Further we believe the addition of an experienced finance director to the management team of Investee Companies, even on a part-time basis, will enhance returns. This is why each investment is allocated a Jenson finance director a key differentiation between ourselves and other SEIS and EIS providers. The combined SEIS and EIS structure is designed to provide increased diversification as a portfolio investment. The balance between capital growth, portfolio risk and time horizon is maximised, whilst enhancing the tax advantages available.

CHF Enterprises CHF Enterprises Ltd (CHF) presents an exciting and unique opportunity for UK tax payers to invest in both SEIS and EIS qualifying media production companies, whilst also benefitting from risk mitigation in the form of seed and traditional EIS reliefs and Government backed Animation Tax Credits. The company has a strong and proven track record: over the past 40 years, Cosgrove Hall have produced iconic children’s programmes such as Danger Mouse, Postman Pat, Roary the Racing Car and others, and CHF has a multi BAFTA and International Emmy award winning creative team • One of its recent shows, Pip Ahoy! was funded via CHF’s own in-house EIS offering and is now on air on channel 5’s Milkshake every weekday for 5 years, to great media acclaim.

The group has multiple revenue streams from Broadcast and License and Merchandising sales with unlimited investment returns. All shows are produced in the UK and qualify for the Government’s Animation Tax Credits.

The Oxford Technology – OT(S)EIS Fund The Oxford Technology OT(S)EIS fund specialises in investing in early-stage and start up science and technology companies, a field in which Oxford Technology has had over 30 years of experience. The fund mainly invests in companies based in or near to Oxford, often spun out of the University, and gets actively involved to help the founders succeed. The fund has invested in 13 companies so far in a wide range of sectors – from state of the art medical tools for cancer surgery, to mobile software, to industrial scale machines for the creation of chemically pure metal powders. The investments tend to be high risk, high reward, but an investor should not be put off - the generous tax benefits of the SEIS scheme are designed for just this type of investment. The scheme mitigates much of the risk, while simultaneously multiplying the rewards. We publish a quarterly report for the fund on our website, which contains full details of all of the investments, and we recommend all those interested read it. The fund is always open to investment.

Open Offers

SEIS

UP Business Accelerator SEIS and EIS Fund

Open

UP Business Accelerators are sited in Edinburgh and Manchester, home to two of the UK’s strongest universities in Informatics. Focused on techmedia propositions, the UP Accelerator puts early stage companies through an intensive programme aimed at significantly shortening the time taken to achieve commercial traction. The fund, managed by Par Fund Management Limited, provides a small installment of acceleration capital to each company admitted to a cohort and then makes a larger investment in the pick of the businesses graduating from the programme. The fund is currently open to elective professional clients only. UP Business Accelerators bring together an experienced core team of individuals supported by corporate “Enterprise Partners” who together offer cohort companies a rich blend of hands-on business experience, material and intellectual support and, in the case of Enterprise Partners, potential customers, partners or acquirors. Unlike many incubators and accelerators, the UP model is based on alignment of interest, so rather than cohort companies using investment proceeds to pay UP Business Accelerators for their participation in the programme, they give up a small equity stake instead.

Tesseract Interactive SEIS Fund 5

Now

Evergreen

Amount to be Raised: Unlimited

T. 0131 556 0044 E. info@parequity.com www.parequity.com

SEIS Open

The Tesseract Interactive SEIS Fund 5 provides investors with access to companies operating in the interactive entertainment sector. It is the 5th such fund to be offered by Daedalus Partners, an experienced SEIS Fund manager with over £17.5m of SEIS funds under management.

21/11/2014

03/04/2015

Amount to be Raised: £3m

The Tesseract funds have already invested in over 60 developers of applications and services for mobile devices, online games and downloadable content for the console/handheld market. It aims to achieve an attractive risk/reward profile through a balanced blend of investments in high-growth, start-up companies with potential for significant equity returns, and other investments in small enterprises exploiting established franchises, IP and creative teams.

T. 020 7866 5452 E. info@daedalus-partners.com www.daedalus-partners.com

Albion Ventures LLP - Albion VCTs Prospectus Top Up Offers 2014/2015 ALBION VENTURES LLP is one of the largest independent venture capital investors in the UK, we have been managing investments in small unquoted companies since 1996. Albion manages approximately £245 million across six Venture Capital Trusts. We have a conservative investment strategy achieved by investing in a combination of more stable asset-backed investments and a lower level of investments in higher-growth companies. The portfolio which includes healthcare, environmental, education and technology, ensures a wide sector spread. We are delighted to offer investors this further opportunity to acquire new shares in six Albion VCTs. The Albion VCTs Prospectus Top Up Offers 2014/2015 are designed to provide investors with: • Monthly tax-free dividend income of around 6% p.a.* • Compound capital growth option through Dividend Reinvestment Scheme • Experienced manager with strong track record • Investment into existing mature portfolio • Conservative investment strategy

*equivalent to approximately 8.5% on the net cost of investment after up-front tax relief at 30% and this only applies if an investment is made in all 6 VCTs

VCT Open

November 2014

31/03/2015

Amount to be Raised: £25.5m

T. 020 7601 1850 E. smant@albion-ventures.co.uk www.albion-ventures.co.uk

www.eismagazine.com · January/February 2015

Open Offers

VCT Open

November 2014

04/04/2015

Amount to be Raised: £30m

PUMA INVESTMENTS - PUMA VCT 11 Puma VCT 11 builds on the market-leading track record of previous VCTs. Puma VCT 11 will adopt the same, proven investment strategy primarily investing in established businesses in the form of ordinary equity together with senior secured loans. Strong Track Record: Puma VCTs I to V head their peer group for total return. Puma VCT V, the latest VCT to close delivered a total return of 106.3p per share, (equivalent to a 9.4% annual return) making it the highest return to date for a limited life VCT.

T. 020 7408 4070 E. info@pumainvestments.co.uk www.pumainvestments.co.uk

IHT Open

June 2013

Monthly

Amount to be Raised: Unlimited

T. 020 7408 4070 E. info@pumainvestments.co.uk www.pumainvestments.co.uk

IHT Open

October 2014

Open Ended

Amount to be Raised: Unlimited

Dividends: Target average annual tax-free dividend of 5p per share commencing from April 2017. Five Year Life: It is envisaged that after 5 years, the Directors will propose a special resolution for shareholders to vote on the process of winding-up the Company. Investment Size: Minimum subscription level is £5,000.

PUMA INVESTMENTS - PUMA Heritage Puma Heritage’s core focus is on secured lending. Its primary objectives are to preserve capital and mitigate risk. Strategy: Conservative trading strategy focused on secured lending. Flexibility: Choice of income or growth shares and ability to switch between them. Directors: Three experienced Directors bringing a multi-disciplinary approach. Experienced Adviser: Puma Heritage has appointed Puma Investments as its trading adviser. Aligned Interests: The interests of Puma Investments (the trading adviser) and Shareholders are entirely aligned: Puma Investments will not receive any performance fees and its annual advisory fees are only paid in full if the minimum target annual return is paid in full. Liquidity: Twice yearly opportunity to access capital (subject to terms set out in the Prospectus). Subscription Amount: Minimum subscription of £25,000 with no maximum. Inheritance Tax: It is intended that a subscription for shares in Puma Heritage will benefit from relief from Inheritance Tax provided the shares have been held for at least 2 years prior to and at the point of death.

PUMA INVESTMENTS - PUMA AIM INHERITANCE TAX SERVICE Puma AIM Inheritance Tax Service is a discretionary service that seeks to mitigate Inheritance Tax by investing in a carefully selected portfolio of AIM shares. The Puma AIM Inheritance Tax Service is also available in ISAs.

Portfolio Service: A discretionary portfolio service that seeks to deliver long term growth focusing on quality companies listed on AIM. Inheritance Tax: It is intended that investors will benefit from relief from Inheritance Tax provided investments are held for at least 2 years prior to and at the point of death. Minimum subscription of £15,000 with no maximum. T. 020 7408 4070 E. info@pumainvestments.co.uk www.pumainvestments.co.uk

EIS Magazine · January/Febuary 2015

Available in ISAs: Whilst ISAs are extremely tax efficient during the holder’s lifetime, upon death ISA balances may be subject to a 40% IHT liability. Investing in a portfolio of qualifying AIM stocks allows holders to mitigate Inheritance Tax while still retaining the benefits of an ISA. ISA Transfers can be accepted from existing providers as well as new investments.

Open Offers

IHT

Cocoon - The Cocoon Green Energy Solar Fund

Open

A solar energy investment opportunity designed to help reduce inheritance tax liabilities through shares in a company that qualifies for Business Property Relief. This means that your investment will receive a 100% exemption from inheritance tax after just two years and could reduce the IHT payable on your estate. The Fund also delivers an inflation proofed return of RPI* + 2.5% annually, paid quarterly, whilst providing easy access to your investment (on 30 days notice) if you need it through a substantial liquidity reserve. No fees or charges are ever deducted from your investment, unlike every other major provider of inheritance tax solutions. The investment is extremely secure and low risk with returns are underpinned by long term, Government guaranteed, inflation linked, subsidies and the sale of power in 10 + year contracts to major power companies. This product is only suitable for investors receiving advice or which meet Cocoon’s appropriateness test. *RPI is the rolling 12 month average ONS published figure

Now

Amount to be Raised: Unlimited

T. +44 (0)207 478 2800 E. info@cocoonwealth.com www.cocoonwealth.com

IHT

TIME Investments TIME:Advance

Open

TIME:Advance is aimed at individuals looking to reduce their Inheritance Tax (IHT) liabilities and offers 100% IHT relief in just two years, alongside a targeted return of 3.5% per annum. Importantly clients retain access and control, so have the option to withdraw a lump sum or set up regular withdrawals in the form of an income. TIME:Advance focuses on capital preservation by investing in asset backed businesses, with no debt which qualify for Business Property Relief (BPR). The product is managed by an expert team, with a proven 19 year track record of success in achieving BPR for investors.

April 2013 Amount to be Raised: Unlimited

T. 020 7391 4747 E. questions@time-investments.com www.time-investments.com

IHT

TIME Investments TIME:Corporate Trading Companies

Open

TIME:Corporate Trading Companies (TIME:CTC) is our bespoke Inheritance Tax (IHT) solution for corporate investors, which boasts an impressive 19 year track record of delivering IHT relief for investors. TIME:CTC is aimed at business owners who have built up surplus cash in their business and could potentially lose Business Property Relief and/or Entrepreneur’s Relief. TIME:CTC focuses on capital preservation by investing in asset backed businesses which qualify for Business Property Relief (BPR). It targets an attractive 3.5% return and we currently have more than 1,000 clients invested.

October 1996 Amount to be Raised: Unlimited

T. 020 7391 4747 E. questions@time-investments.com www.time-investments.com

www.eismagazine.com · January/February 2015

Open Offers

IHT Open

Evergreen

Amount to be Raised: Unlimited

T. 020 3195 3500 E. info@stellar-am.com www.stellar-am.com

IHT Open

Evergreen

Amount to be Raised: Unlimited

T. 020 3195 3500 E. info@stellar-am.com www.stellar-am.com

IHT Open

Evergreen

Amount to be Raised: Unlimited

T. 020 3195 3500 E. info@stellar-am.com www.stellar-am.com

EIS Magazine · January/February 2015

Stellar Asset Management – Stellar Succession Stellar Succession utilises Business Property Relief to provide 100% exemption from IHT after just two years while enabling clients to keep control and ownership of capital. Each client becomes a sole shareholder of their own bespoke private limited trading company, which allocates capital to a diversified portfolio of asset backed, Business Property Relief qualifying trading activities including Forestry, Farming, Bridging Finance, Hotels and Renewable Energy. The service has a focus on capital preservation– our trades within Stellar Succession are securitised, non-correlated to main stream asset classes, UK based and we do not use gearing.Each of our trades has a target return of 5% pa (net), returns are uncapped and clients have the flexibility to opt for growth or income. The service is managed and fully administered by Stellar on the behalf of every client within a competitive and transparent cost structure. We offer a unique, but optional insurance policy across our range of IHT products to protect investors from any future loss of value. The policy provides investors and advisers with peace of mind and ensures beneficiaries always receive the original amount invested.

Stellar Asset Management – Stellar AIM IHT Portfolios Stellar AIM IHT Portfolios provides clients with a discretionary managed, diversified portfolio of AIM listed companies with the option of a unique insurance policy to protect investors from any future loss of value. Each portfolio will be made up of AIM shares that qualify for Business Property Relief, providing 100% IHT relief after just two years while enabling clients to keep control and ownership of capital. Stellar AIM IHT Portfolios therefore creates a straightforward IHT solution while offering potential for growth and easy access & liquidity for those who wish to transfer existing stocks and shares or have cash holdings. The investment strategy exercises a well diversified, disciplined stock selection policy which focuses on long-term capital growth, and risk mitigation. This process entails the detailed analysis and selection of companies that must exhibit a market value supported by tangible assets or yield. The average market capitalisation of companies in our portfolios is c£180 million and many are household names. We offer a unique, but optional insurance policy across our range of IHT products to protect investors from any future loss of value. The policy provides investors and advisers with peace of mind and ensures beneficiaries always receive the original amount invested.

Stellar Asset Management – Stellar AIM IHT ISA Stellar AIM IHT ISA provides clients with a diversified portfolio of AIM listed companies in a tax free ISA wrapper with the option of a unique insurance policy to protect investors from any future loss of value. Our AIM IHT ISA is one of the most tax-efficient investment opportunities available on the market. It is free from income tax, capital gains tax and, after just two years, inheritance tax.Each portfolio will be made up of AIM shares that qualify for Business Property Relief, providing 100% IHT relief after just two years while enabling clients to keep control of capital, without losing any of the benefits of their existing ISA. Stellar AIM IHT ISA therefore provides individuals with a straightforward IHT solution, offering potential for growth and easy access, for existing ISA transfers and new ISA investment. The investment strategy exercises a well-diversified, disciplined stock selection policy which focuses on long-term capital growth and risk mitigation. We offer a unique, but optional, insurance policy across our IHT products to protect investors from any future loss of value. The policy provides investors and advisers with peace of mind and ensures beneficiaries always receive the original amount invested, creating the UK’s only fully insured ISA with IHT relief.

Open Offers

BPR

Oxford Capital Estate Planning Service

Open

The Oxford Capital Estate Planning Service is an investment which, if held for at least two years and still held at death, can be used to shelter part of an individual’s estate from Inheritance Tax. The Estate Planning Service provides a range of investment options, targeting capital growth of 3%-5% per annum. Should their circumstances change, investors can request access to part or all of their capital, by asking Oxford Capital to sell their underlying shares.

Investors in the Estate Planning Service will acquire shares in unquoted trading companies. Managed by Oxford Capital’s infrastructure investment team, these trading companies will make equity investments in, and loans to, companies which in turn will own and operate revenue-generating infrastructure assets, such as renewable energy installations. The investor’s shares should qualify as ‘Business Property’, and therefore beeligible for 100% relief from Inheritance Tax through Business Property Relief, if held for the requisite period.

Now

Evergreen

Amount to be Raised: Unlimited

T. +44(0)1865 860 760 E. info@oxcp.com www.oxcp.com

Tax Efficient Investing for HNW Clients

A Year-End Adviser Seminar on EIS/VCT and BPR Investments from IFA Magazine and EIS Magazine CPD accredited

Birmingham. Hyatt Regency Tuesday 24th February 2015 10.30am - 1.30pm

London. The Capital Club Thursday 26th February 2015 10.30am - 1.30pm

Both of these seminars will explore the possibilities for HNW investors of all types, and will explore EIS/SEIS, VCT, BPR and SITR investments with an impressive panel of expert speakers. Lunch Included. Registration is free, full details at http://tinyurl.com/no5dogd www.eismagazine.com · January/February 2015

Start with an Exit Strategy It’s All About the Exit, You Know. Guy Tolhurst, Managing Director of Intelligent Partnership, Shows How Investors Can Benefit from Rolling Up EIS Investments and Stacking Exits for Income

In this article we’re going to examine the possibility of re-investing the gains from EIS investments in other EIS offers, and using ‘exit focused’ EIS investments to try and build a tax-free source of annual income for the future. This investment idea initially appeared in our 2014 EIS Industry Report, the spreadsheet we used to calculate the returns is available to IFAs on request from research@intelligentpartnership.com

Year 1

A B C

Our Methodology For our calculations we looked at a hypothetical strategy where the investor has a surplus £10,000 annually and has used (or nearly used) their lifetime allowance within their pension and their annual ISA allowance. Clearly we are thinking about wealthier investors here perhaps nearing retirement age and mortgage free home owners. By investing the annual £10,000 surplus into EIS schemes with an exit focus, the capital can be recycled into

£10,000.00

£13,000.00 £10,000.00

£10,000.00

£16,900.00 £13,000.00

£10,000.00

£16,900.00 £13,000.00

£16, £13,000.00

£10,000.00

£13,000.00 £10,000.00

£13, £10,000.00

H POT

£10,000.00

Initial Investment

another investment at exit. In our simple example we have recycled the capital after every three years and assumed each investment returns 1.3 x capital - although the spreadsheet we compiled allows readers to experiment with differing timeframes and levels of return. We implemented this strategy with the surplus £10,000 a total of eight times (Pots A–H in the table below). This means that the Pot A can be crystallised in year 10 and the total return of £21,970 can be taken as a tax

EIS Magazine · January/February 2015

Start with an Exit Strategy

Book your place at the EIS Masterclass event Special Discount for EIS Magazine Readers For details visit http://tinyurl.com/lpwjtsc

free gain – and the same can be done with all the subsequent pots until year 17, providing a tax free annual income – potentially in the early years of retirement when spending is highest. More Complex Scenarios Of course, in reality the initial investment amounts are likely to fluctuate as client circumstances change: the level of returns will vary greatly, EIS managers may take longer to achieve an exit than planned at the outset and advisers and investors may work over differing timeframes. In the spreadsheet we’ve included the ability for readers to manipulate all of these variables to explore more volatile, real world scenarios. We carried out similar research with company returns set at levels

based upon NESTA research (56% return less than cost, 35% return 1.5x cost and 9% return >10x capital) and randomly distributed through our scenario. As you would expect, the ‘income’ taken as the investor starts to exit was much more erratic, but still almost always positive each year, with some years providing significant returns in the tens of thousands. We’ve distributed this range of returns randomly across the 24 investments the strategy calls for, but of course in reality achieving higher returns earlier would have a positive effect due to compounding. EIS

Taking Profits As Income

£21,970.00 £21,970.00

,900.00

£21,970.00 £16,900.00

,000.00

£21,970.00 £16,900.00

£13,000.00

£21,970.00 £16,900.00

£13,000.00

£21,970.00 £16,900.00

£21,970.00

Re-investing Gains

www.eismagazine.com · January/February 2015

Invest in energy companies through an EIS. Another bright idea from Octopus. At Octopus we’re a big admirer of bright ideas. That’s why we love the Enterprise Investment Scheme (EIS), a government-backed initiative which gives investors a number of ways to save on their tax bills. We also love the investment potential of the UK energy sector, which is undergoing a huge transformation. So why not combine these two bright ideas into one? We have. It’s called Octopus EIS. To find out more, talk to your Business Development Manager on 0800 316 2067 or visit octopusinvestments.com

Important Information For professional advisers only and not to be relied upon by retail clients. This financial promotion has been issued by Octopus Investments Limited which is authorised and regulated by the Financial Conduct Authority. Your capital is at risk and you may not get back the full amount invested. Tax treatment depends on the individual circumstances of each investor and may be subject to change. Past performance is not a reliable indicator of future results and any forecast is not a reliable indicator of future performance. The availability of tax reliefs also depends on the investee companies maintaining their qualifying status. Octopus EIS invests into small unquoted companies which are likely to have higher volatility and liquidity risk than shares quoted on the London Stock Exchange Official List. This promotion does not offer investment or tax advice and as this product is not suitable for everyone we recommend you seek independent investment and tax advice before investing in our products.