Enterprise Investment Scheme (EIS) – An Overview


19th July 2018

Disclaimer: The purpose of this note is to provide a brief overview as to what EIS is, what tax reliefs are available for investors, what the qualifying criteria for the company, the shares and investor are and to also provide a summary of the process of how to obtain the tax relief. It is not intended as legal advice and, in the case of specific problems, we recommend that professional advice be sought.

What is EIS and why should it interest you?

EIS stands for Enterprise Investment Scheme, a scheme which gives tax reliefs to individual investors in return for investment in small and early stage private companies.

If your start-up or early stage business is looking for investment from individuals, being EIS-compliant can help attract funding as it is a very tax-efficient way for them to invest.

Relief 1: Income Tax

Provided that the investor holds qualifying shares for three years, the investor’s income tax liability is reduced by 30% of the sums invested, up to the annual investment limit (currently £1,000,000).

The relief is available for the tax year in which the shares are issued, but the investor may elect to treat the shares as having been issued in the previous tax year.

By way of example, in the 2015 – 2016 tax year, Adam invests £250,000 by way of subscription for new ordinary shares in a qualifying company. Adam’s income tax liability for 2015 – 2016 is reduced by £75,000 (30% of £250,000).


Relief 2: Capital Gains Tax

Provided that the investor holds qualifying shares for three years, the investor is exempt from any liability to pay capital gains tax on a disposal of the qualifying shares.


For more information about the conditions and process to apply for EIS, please read the document on our website here: http://bit.ly/2uLoAdh, or contact Kirsty Simmonds.


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