Tax Credits & Reliefs >> Business Expansion Scheme (BES)Investments

Tags: tax deductions, tax refunds, investment tax relief

Who can claim?
Any person making a qualifying investment during the period to 31st December 2013. However for 2011 the relief is being replaced with a new form of relief called Employment and Investment Incentive Scheme ( EIIS). The new scheme is subject to EU approval. The rules of this new scheme are broadly similar to the BES rules.
Relief Due
For years up to 31st December 2006 tax relief is available on the amount invested up to a maximum of €31,750. In cash terms this is worth €13,335 for a 42% top rate tax payer.
There has been a very substantial increase in the amount which can be invested for tax relief purposes from 2007 tax year onwards. The amount which can be invested is now €150,000 per annum. In cash terms the tax relief is worth €61,500 for each tax year. 

For married couples both spouses are entitled to make a claim provided each has income in their own right to cover same. For the tax year 2007 onwards a married couple could make a combined BES investment of €300,000 provided each has sufficient income in their own right to offset against the cost of the investment. 

Under the new EIIS the tax relief will be divided as to 30% in the year of investment and the remaining 11% in the third year of the investment.
  
These schemes are usually promoted by financial institutions and investment brokers. The promoters usually provide an explanatory memorandum outlining the rules and regulations applicable to each scheme. It is likely that there will be a renewed interest in these schemes as a result of the increased amount qualifying for tax relief from year 2007 onwards.
You must keep your investment for a minimum period of 5 years. If the investment is disposed off within the 5 year period then the tax relief originally received will be repayable to the Revenue. Under the new EIIS the holding period is 3 years..

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