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Hereford United chairman David Keyte is looking for investment in the club to help get through the current financial crisis. However as investing in a football club seldom brings a reasonable return, any potential investor would need a fair bit of assurance that his money wouldn't be lost for ever.
One possible way to encourage investors may be through an EIS - Enterprise Investment Scheme - which gives tax breaks for those able to subscribe.
The scheme is being used by football clubs.
Interestingly one of those clubs is FC United, who the Bulls meet next Saturday in the FA Cup.
FC United launched a fundraising scheme which was basically a community share issue. It raised over £500,000 in two months and the HM Revenue and Customs confirmed that there was tax relief on the shares.
The FC United community share scheme has a minimum share purchase of
£200. The share issue has been given advance approval by the HMRC
Enterprise Investment Scheme and subject to personal circumstances this
allows individuals to claim tax relief of up to 30 per cent on the
amount that they purchase in the share scheme.
Another club currently in the process of raising money is Wrexham. Their problems are well known and a supporters trust is running the club.
Enterprise Investment Scheme
We are applying to HMRC for approval for the share offer to be accepted into the Enterprise Investment Scheme. Subject to personal circumstances, this would enable individual members to claim tax relief of up to 30% on investments of more than £500 in the community share scheme.
Meanwhile, outside football, a steam railway is using the EIS to help gain funds.
The Severn Valley Railway, which attracts around 200,000 visitors per year, needs 'vital investment'.
So they have set up an EIS and since October 1st have already raised £364,000. The minimum investment is £100 but two investors have already put in £30,000 each.
It's reported that taxpayers who buy shares can claim 30% relief on their investment.