Business expansion scheme: tax relief example,the good and bad companies

Hello All, i have recently seen alot of advertisements in BESs recently in the paper. I am interested in ones to do with windfarms.

I have been searching the internet and searching this forum and found loads of information but want to make sure i have it right.

----------------------------------------------------------------
Tax relief example.
Tax relief is only given to people that pay 41% tax. So next year a single person will start paying 41% when they earn over €32,000 a year. So for tax reasons it does not make sense for a person to invest in a BES unless they only interested in the return on the interest.

Example
Single Person earning €35000. If they invest €10000 in a scheme they will get tax relief of €4,100. The relief works by %41 of what you invest in the BES. There is a maximum tax relief of €31,500.So a the single person above will be paying %41 on €3000 euro. because they are earning over €32000 a year.so by investing in the scheme they will not pay any tax on the €3000 because they have a relief of €4,100 on 41% tax. so the tax relief is saving you €1200 a year on not paying tax to the government.

They still have to pay 20% tax on the €32,000 because the scheme does not give relief on the 20% bracket.
--------------------------------------------------------------
Also there seems to be a set rate of 3% of cost of what you invest in the company. this is taken by the promoters of the BES.

I have read alot on the BES on this site and alot people say they are not worth investing because by the time 5 years comes the company could be bust and have nothing to give you.

I have seen a good way to look at a company in this post.
http://www.askaboutmoney.com/showpost.php?p=1107594&postcount=10


Is there any BES scheme that worked out there for anyone? What sector was it?

I know aswell that you must spread out over a BES either through funds or investing in Different BES yourself.

Also i thought you would get the tax relief every year. But now from this site you only get tax relief for the year you invest in the BES.

I thought you would get that relief for every year you kept the investment in the BES.

Here is a site that has a good example of BES costs and outcome. ( good outcomes)
http://www.simple.ie/index_looking.php

Evoke, tax relief is not limited to income on which you are paying 41% tax.
In your example, a person getting €35000 and investing €10000 into a BES scheme would pay tax on €25000.
Some relief would be at 41%, some at 20%, which is why investors usually limit their investment to the amount that would just keep them out of the higher tax bracket.

Be very careful of BES investments!There are too many companies like "operating" in Ireland ....

Someone earning €35,000 shouldn't be going anywhere near EIIS (i.e. BES). It's generally Hail Mary stuff and typically these companies are looking for EIIS funding because everyone else has told them to get lost. You have to go into these prepared to lose your entire investment. People get blinded by the 40% tax relief and think that because €100 of share value is only costing them €60 that somehow it's automatically a great deal.

BES Schemes don't have the best track record of people actually making a return on their investment. The loss is only reduced by tax relief but you still have a very good chance of never seeing your money again. I'd prefer to invest my money in established companies and pay the tax on profits.

Steven
www.bluewaterfp.ie