Under the EIS, what benefit is granted for investments held for at least two years?

Under the Enterprise Investment Scheme (EIS) in the UK, investors are granted several tax reliefs for supporting certain types of businesses, which are designed to encourage investment in small and early-stage companies. One of the key benefits provided by the EIS is an exemption from inheritance tax if the investment is held for at least two years. This means that if the investor passes away after holding the investment for the required period, the value of the investment will not be subject to inheritance tax, making it an attractive option for long-term investors.

The importance of this provision lies in the potential to pass wealth on to heirs without the burden of significant tax, thereby providing a strong incentive for individuals to invest in qualifying companies. This benefit enhances the appeal of investing in small businesses and startups that might be considered higher risk but have the potential for substantial growth.

In contrast, other options relate to various tax implications and benefits but do not accurately align with the EIS benefits for a two-year holding period. Options that suggest tax credits on future earnings, immediate tax refunds, or capital gains tax deferral do not accurately describe the specific tax reliefs associated with the EIS and its conditions regarding investment duration.