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Enterprise Investment Schemes (EIS)

The Enterprise Investment Scheme (EIS) was set up by the UK government in 1994. It aims to help small, private companies raise the money they need to become high-growth companies.

 

Shares are offered to individual investors and a maximum of £12m can be raised using this scheme.

What are EIS Investments

For investors, there are significant tax reliefs when you invest in an EIS-qualified company.

Tax relief for Investors

EIS offers a number of substantial tax breaks to investors who buy shares in EIS-qualifying companies:

  • Income tax relief of up to 30% of the sum invested.

  • Exemption from capital gains tax (CGT).

  • CGT deferral relief.

  • Exemption from inheritance tax.

  • Loss relief.

To be eligible for EIS relief, investors will need to hold the shares for at least three years before selling them.

The EIS limits

You can invest up to £1,000,000 each tax year and spread this across a number of companies.

You can’t be the director of the company you’re investing in, only a shareholder.

You can’t hold more than a 30% stake in the company you’re investing in.

Capital at risk

Typically, opportunities available in the real world are intended to be viewed by self-certified high net worth or sophisticated investors.

Investing in early-stage businesses is itself a risky business. There is a good chance that you could lose all or some of the money that you invest. You should therefore not invest more money than you can afford to lose without your quality of life being impaired as a result.

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