Page 62 - Praetura EIS 2019 Fund Information Memorandum

Praetura will ensure all investments made within
the Fund are suitable for EIS qualification

The same
investment offers To qualify under the EIS rules, a company must meet various criteria, the
62% better return main ones are as follows:
with EIS tax reliefs • is established in the UK;
than without
Qualification & Benefits • isn’t trading on a recognised stock exchange at the time of the share
issue and doesn’t plan to do so (also known as an unquoted company);
• doesn’t control another company other than qualifying subsidiaries;
Initial Investment
• isn’t controlled by another company or doesn’t have more than 50% of
its shares owned by another company;
Invest with EIS Relief Invest without EIS Relief
• must not have gross assets worth more than £15 million before any
Total Investment £100,000 £100,000 shares are issued and not more than £16 million immediately afterwards;
Less: Income Tax Relief (£30,000) £- • has fewer than 250 full-time equivalent employees at the time the shares
are issued;
Net Cost of Investment £70,000 £100,000
• must carry out a qualifying trade. Trades that are excluded include coal
or steel production, farming, leasing activities, legal or financial services,
Investment Returns (assuming company doubles in value) property development, running a hotel or nursing home, generation of
electricity, heat, gas or fuel;

Invest with EIS Relief Invest without EIS Relief • can’t raise more than £5 million in total in any 12-month period unless
the company qualifies as a Knowledge Intensive Company in which case
Sale of Shares £200,000 £200,000
the annual limit increases to £10 million.
Less: Net Cost of Investment (£70,000) (£100,000)
HMRC have introduced new rules to prevent certain types of investment
Total Gain / (Loss) £130,000 £100,000
from qualifying for EIS, known as the “Risk to Capital” conditions. The new
Capital Gains Tax £-* (£20,000) rules ensure that EIS relief remains available to companies whose objectives
are to grow and develop over the long-term, however they look to deny
Net Gain / Loss £130,000 £80,000
relief for investments where there is not a real risk that there could be a loss
Percentage Gain on Net Cost 186% 80% of capital to the investor

* No capital gains as long as shares held for 3 years