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If you invest under a certain threshold you can actually deduct the full amount from taxes in case of failure. Don't recall the details, but it makes for a pretty sweet deal for angel investors.



If it's fully tax deductible, then you simply don't pay tax on that amount (not reduce your payable tax by that). It saves you about a third of the money, but doesn't make it risk-free.

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I was thinking about the EIS scheme. There's some explanation here: http://en.wikipedia.org/wiki/Enterprise_Investment_Scheme

I believe the most important part is this:

If EIS shares are disposed of at any time at a loss, such loss can be set against the investor's capital gains or his income in the year of disposal.

So basically, if you take a loss, you can deduct it against any other gains you have.

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Exactly, so what it says is if you have 10.000 loss on share-A, and 10.000 capital gain on share-B, then you can set the loss against your gain and not pay tax on that 10k of income. I.e., purely for the share-A you still lose the 10.000 but gain a "tax credit" worth some % [whatever your rate is] of that. A common misunderstanding is that you'd get "tax credit" of 10.000, which you don't.

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