Information Memorandum - Foresight Group
Information Memorandum - Foresight Group
Information Memorandum - Foresight Group
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SUMMARY OF TAX RELIEFS<br />
TAX TREATMENT WILL DEPEND ON INVESTORS’ INDIVIDUAL CIRCUMSTANCES AND ALL POTENTIAL<br />
INVESTORS SHOULD, THEREFORE, SEEK TAX AND FINANCIAL ADVICE BEFORE INVESTING.<br />
YOU MUST HOLD EACH INVESTMENT FOR A THREE YEAR PERIOD TO RETAIN THE EIS RELIEFS<br />
SUMMARISED BELOW. EIS RELIEFS ARE ONLY AVAILABLE ON YOUR INVESTMENT IN EIS<br />
QUALIFYING SHARES.<br />
YOU SHOULD SEEK ADVICE IN RELATION TO TAX RELIEFS. A MORE DETAILED EXPLANATION<br />
OF THE TAX RELIEFS AND EIS REQUIREMENTS ARE SET OUT IN PAGES 24 TO 25.<br />
Income tax relief<br />
Eligible Investors can reduce the amount of income tax<br />
they pay by 30% of the amount invested in EIS Qualifying<br />
Investments made through the Fund. As an example, if an<br />
Investor invests £100,000 in EIS qualifying Investments<br />
through the Fund, the Investor can reduce the amount of<br />
income tax paid by £30,000. This relief is available on the<br />
first £1,000,000 of EIS qualifying investments in each tax<br />
year. If an Investor invests more than £1,000,000 through the<br />
Fund in any tax year, the reduction in their income tax bill for<br />
that year will be £300,000. The amount of income tax relief<br />
claimed cannot exceed that which an eligible Investor is<br />
due to pay.<br />
Eligible Investors can claim the relief against their income<br />
tax liability in the tax year that <strong>Foresight</strong> makes each EIS<br />
qualifying Investment or such relief can be carried back for<br />
the preceding tax year to the extent the eligible Investor has<br />
not used their annual limit in the previous tax year. EIS income<br />
tax relief in respect of investments made in the 2013/2014 tax<br />
year may be carried back into the 2012/2013 tax year up to the<br />
annual limit of £1,000,000.<br />
Capital gains tax deferral relief<br />
Eligible Investors can defer capital gains up to the amount<br />
invested in Investments made through the Fund. This<br />
applies to gains made in the three years before the effective<br />
date (see timing below) and future gains made up to one<br />
year after the effective date. Gains are deferred until the<br />
Investor sells their EIS qualifying Investments that <strong>Foresight</strong><br />
has made for them through the Fund. Capital gains tax will<br />
apply to the deferred gain at the rate in force when the<br />
Investments are sold.<br />
Capital gains tax exemption<br />
Any capital gains realised on a disposal of Investments made<br />
through the Fund after the Three Year Period, and on which<br />
EIS relief has been given and not withdrawn, will be capital<br />
gains tax free. Any capital gains realised on a disposal within<br />
the Three Year Period will be subject to capital gains tax, at<br />
the current rate which is either 18% or 28% for individuals<br />
(the tax rate used depends on the total amount of the<br />
individual’s taxable income).<br />
Inheritance tax relief<br />
Once an Investment made through the Fund has been held<br />
for two years, eligible Investors should qualify for 100%<br />
Business Property Relief. This means that an Investment will<br />
be an exempt asset for IHT purposes, provided the Investment<br />
is held at date of death.<br />
Business Investment Relief<br />
The Finance Act 2012 includes provisions whereby nondomiciled<br />
residents can use untaxed overseas income or gains<br />
to invest in the UK in qualifying investments without making a<br />
04 FORESIGHT SOLAR EIS FUND 3<br />
taxable remittance under the Business Investment Relief (BIR)<br />
scheme. This major new relief offers non domiciled residents<br />
who have foreign income or gains that would be taxable on<br />
the remittance basis if brought to the UK a major opportunity<br />
to make commercial investments in the UK, into qualifying<br />
investments.<br />
Amounts remitted to the UK must be invested within 45 days<br />
of being brought to the UK. If the investment is aborted after<br />
funds have been brought to the UK, then no UK tax charge will<br />
arise providing the funds are taken overseas within 45 days of<br />
the day that they originally came to the UK.<br />
On the disposal of a qualifying investment the investor has 45<br />
days from the date of receipt of the proceeds to take overseas<br />
the proceeds or to make another qualifying investment.<br />
Special rules apply where the investment is part sold or<br />
proceeds are below cost. EIS Qualifying Companies in which<br />
<strong>Foresight</strong> Solar EIS Fund 3 invests will be eligible companies<br />
for BIR and the Receiving Agent has an offshore bank account<br />
to hold such cash. If you are non-domiciled and wish to invest<br />
using BIR, please contact <strong>Foresight</strong>’s Sales team on 01732<br />
471812 for a bespoke application form.<br />
Timing<br />
EIS tax reliefs become available each time that <strong>Foresight</strong><br />
makes an Investment in EIS Qualifying Companies. For<br />
example, if <strong>Foresight</strong> makes the first Investment in October<br />
2013 and commits 25% of the amount subscribed to the Fund<br />
to that Investment, then October 2013 is the effective date for<br />
working out the timing of eligible Investors’ tax relief on that<br />
Investment. Each Investee Company will issue EIS3 certificates<br />
as soon as practical following a period of trading of not less<br />
than four months, which will be sent to eligible Investors by<br />
<strong>Foresight</strong> for that Investment. These certificates provide the<br />
evidence required to claim income tax relief and capital gains<br />
tax deferral relief. <strong>Foresight</strong> would expect to send these EIS3<br />
certificates to Investors towards mid 2014.<br />
<strong>Foresight</strong> intends to fully invest the fund into EIS Qualifying<br />
Companies during Q4 2013 and no later than 5 April 2014<br />
Generally, the Fund Manager reserves the right to return<br />
uninvested funds if it concludes that the funds cannot be<br />
properly invested.<br />
Loss relief<br />
If any of the Investments were realised at a loss, Investors<br />
would be able to set the loss against their income and/or<br />
capital gains when calculating their liability to income tax and/<br />
or CGT in the year of realisation. This means that an Investor’s<br />
maximum potential losses should not exceed 42% of their<br />
total Investment after taking the income tax and loss reliefs<br />
into account assuming that an Investor’s marginal rate of tax is<br />
40% (if an Investor’s marginal rate is 45%, then the maximum<br />
exposure would be even lower at 38.5%).