One in three investors looking to EISs in next 12 months
- On October 21, 2016
- By Kate Arnold
Almost one-third (30%) of consumers are looking to invest by way of an Enterprise Investment Scheme (EIS) over the next 12 months, according to research from IW Capital.
The tax-efficient investment firm’s survey of 2,000 UK consumers also found nearly two-fifths (38%) of millennials – those aged 18 to 34 – are factoring EIS investments into their plans over the course of the next year.
Despite those numbers looking to make the most of the schemes, the survey also found more than a quarter (27%) of UK consumers had no intention of doing so at all.
Following the Bank of England’s decision to cut interest rates to the lowest level in British history, IW Capital undertook research to explore what effect this decision had had on consumers’ attitudes to alternative finance.
“This is great news for the UK’s collection of 5.4 million small to medium-sized businesses,” said IW Capital CEO Luke Davis. “With more than £14bn invested through EIS since it was launched in 1993, this scheme has become a vital part of the SME finance landscape and our study shows the future of this initiative is bright.”
Although weighted to provide a more accurate reflection of the UK population, through assessing attitudes regionally, the research found Londoners had the biggest appetite for EIS schemes. Almost half (45%) of the capital’s respondents said the scheme was on their radar, while the South East and North East, both (30%), were the next keenest areas.
Davis added: “Following closely after Britain’s vote to leave the European Union, the Bank of England’s decision to cut interest rates to record lows has had an inevitable ripple-effect, impacting people in every corner of the UK.
“This period of political and economic change makes it extremely important for savers and investors alike to evaluate the effectiveness of their financial strategy for the months and years ahead.”
Despite the increasing appetite for alternative finance, the survey found almost half (43%) of respondents do not feel informed enough about EISs to make a decision on whether to factor it into their investment plans.
Davis said that despite the apparent growing popularity of the scheme, more education around the tax-efficient invesments was required to “unlock the full potential of Britain’s pool of investors”.
“The research has also uncovered a pressing issue that must be addressed,” he added. “It is the responsibility of the government and industry bodies to achieve this, providing investors with the information they require to make use of the scheme.”
Following the relaunch of GrowthInvest – a platform specialising in alternative investments – the firm’s managing director Daniel Rodwell also argued more needs to be done to provide information to and educate investors about tax-efficient schemes.
He also argued the media did not do enough to separate the negative views of tax avoidance schemes from government-sponsored tax-efficient investment schemes.
Advisers were expected increasingly to use EISs in inheritance tax planning following changes to the law last year. It has not proved as popular as had been expected, as some advisers are avoiding alternative tax-planning tools.
Read the entire article in Professional Adviser here.
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