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Q. How important is independent financial advice when choosing an EIS investment?
A. The complex investment process often involved with EIS can require time and
knowledge on the part of the investor. Investors were asked whether they felt taking
financial advice was important when considering an EIS investment. 50% feel that it
is not important at all, 17% feel it’s neither important nor unimportant and a further
17% each feel that it’s somewhat important or very important. The requirement to
use an IFA is likely to depend on the knowledge and experience of the investor and
the quality of information available on the investment – the majority of investors
questioned feel they are able to choose an investment without the help of an IFA.
A. Respondents were asked if they agreed
or disagreed that EIS investments should
only be considered once the full ISA and
pension allowances have been used up. The
tax reliefs available from EIS investments
are greater than other tax efficient forms
of saving such as pensions or ISAs. They
also offer further scope for investing across
interesting and exciting sectors as well as
offering the potential for very high returns.
75% of respondents disagreed with this
statement as they feel that EIS should be
considered alongside other tax efficient
saving/investment vehicles. Their suitability
will depend on the investor’s strategy, tax
situation and the level of diversification
they are seeking. EIS investments also offer
opportunities that are not available through
the mainstream investment products
available within pensions and ISAs.
Q. Please state what single
development you would believe would
most improve the EIS market?
A. There were several suggestions here that
cover many different aspects of market:
Better research on the sector
Widely available investment platform
Larger choice when it comes to low risk
funds
Better process for achieving advanced
assurance
More data on performance and track
records
The main development that investors
want to see is an improved process for
submitting paperwork to HMRC for EIS
approved status and advanced assurance
to simplify the process for investors and
speed up the receipt of tax reliefs.
“75% of investors believe EIS should be considered alongside other tax efficient
saving/investment vehicles”
A. Investors with a keen interest in angel
investing, good knowledge of the EIS
market and who are able to obtain quality
information can possibly sidestep the need
to use an IFA to invest in EIS. The remaining
33% do have an IFA who may have expert
knowledge of the market and be able to
assist with in-depth due diligence that the
investor cannot afford to spend time on.
KEY FINDINGS FROM SURVEY
93% of current EIS investors say they
plan on investing in EIS again in the future
The expected level of return was
chosen by 92% of respondents as the most
important criteria when choosing an
investment
92% of investors see poor quality of
information as a reason to hesitate when
considering an EIS investment
67% of respondents selected growth as
their preferred investment strategy
50% of investors feel that it is not
important to seek independent financial
advice when considering an EIS investment
75% of investors believe that EIS
investment should be considered
alongside other tax efficient investing/
savings vehicles
Q. Do you have an IFA?
Q. EIS investments are only appropriate
when both ISA and pension allowances
have been maximised?
