Welcome to Beer & Partners Investor Site

 Given that the 5th April is looming up and next year promises only tax increases, this week’s preamble focuses on the Enterprise Investment Scheme. EIS has brought substantial advantage to British businesses over many years and is only now beginning to be copied by other countries. In April 2009 EC approval for State Aid under EIS and VCT was given subject to a number of changes being made:

• Application of a new requirement that to qualify under either scheme, a company must not be in difficulty;
• Replacement of the requirement that to qualify under either scheme a company must carry on its qualifying trade wholly or mainly in the UK, with one that the company must have a permanent establishment in the UK; 
• Removal of the requirement that a VCT’s shares must be included in the official UK List, replacing it with one that their shares must be traded on an EU regulated market; and changes the rules governing the amount of a VCT’s investment that must be held as equity.

The above changes do not appear to diminish in any way the incentives for business angels focussed on investment into smaller, higher risk businesses (other than turnaround), and continue to target support for investment at those businesses that find it most difficult to raise money.

Approximately 85% of the projects brought by us to your attention qualify for EIS relief and in addition the Beer & Partners EIS Scheme enables investors to gain exposure to a portfolio of early stage business qualifying for EIS relief. We deliberately chose not to have an HMRC Approved Fund (which refers only to tax treatment and is not a mark of approval) as under these schemes a high percentage of funds subscribed are required to be invested within a relatively short timeframe.

We believe that such schemes produce a pressure to invest within a time frame which could compromise quality. Our view (as is that of most of our investors) is that we should take as long as necessary to build a balanced portfolio - which also has the opportunity to introduce an element of diversity by timing - rather than chasing same deals at the same time as everyone else who closes around the tax year end. As the interests of the Investment Advisory team (who have invested personally in the Scheme) are precisely aligned with those of subscribers to the Scheme, we are highly incentivised to achieve success in the underlying investments.

Whilst we do not believe that investments should be tax driven, March is always a time to review any ongoing investment arrangements to maximise benefits and shelter and with this in mind we have linked up with St James’s Place, Longbow and Westbridge SME Fund as well as our own EIS scheme to provide you with alternative investment schemes should they be of interest to you.

Tax Planning

St James’s Place Wealth Management

Pre-Retirement Planning – 60% Tax Relief
From 6 April 2010, the personal allowance will be reduced by £1 for every £2 of income over £100,000. This could result in an effective rate of tax of 60% for individuals earning between £100,000 and £112,950 in the 2010/11 tax year.

For example, someone with an income of £110,000 would not only be liable to 40% tax on the top £10,000 ‘slice’ of their income, but would also lose £5,000 of their personal allowance (£1 for every £2 above £100,000). The ‘lost’ £5,000 personal allowance will now be liable to 40% tax (ie an additional £2,000) meaning the overall tax liability on the individual’s top £10,000 slice of salary is £6,000 or 60%.

By agreeing to sacrifice £10,000 of their salary in exchange for a non-cash benefit such as a pension contribution, the individual would not only reduce their higher rate tax liability, but also retain their full personal allowance. In this example, the individual would reduce their tax bill by £6,000 or, putting it another way, save an effective rate of 60% tax on the amount sacrificed.

Contact: Jonathan Elliott jonathan.elliott@sjpp.co.uk or 0207 638 2400 for more information and/or to arrange a meeting.

Longbow SIPP Venture Fund

A unique opportunity to invest in a professionally managed venture fund specifically designed for holding within a SIPP.  Longbow believes that an investment fund focussing on maximising the full investment flexibility of a SIPP, matched to their experience of managing venture investments, presents a compelling opportunity for a SIPP Investor. Longbow focuses on the healthcare, life sciences and wellbeing sectors which have many defensive attributes and which sit well with pension investment.

Contact: Julian Hickman or Nicola Robson on 020 7332 0320 (email: jhickman@longbow.co.uk or nrobson@longbow.co.uk) or go direct to their website and choose option SIPP Venture Fund.

Beer & Partners EIS Scheme

An investment (minimum £25,000) into this scheme gives subscribers access to a diversified portfolio of unquoted companies, with targeted returns in excess of 20% pa -before taking into account (now more flexible) tax benefits. New subscriptions or top up subscriptions from investors are welcome throughout the year but are of particular relevance given the looming tax year end. Scheme managers negotiate investments and conduct relevant due diligence as well as provide regular reports on progress back to investors.

Contact: Mandy Hutchison mhutchison@beerandpartners.com or 01323 848506 for more information and/or to arrange a meeting.

Mike Weaver, Beer & Partners Limited