Enterprise Investment Scheme
(EIS)
The Enterprise Investment Scheme provides tax reliefs to investors in qualifying small and medium-sized companies that are not listed on a recognised stock exchange. Investors can claim 30% Income Tax relief on investments up to £1,000,000 per tax year (£2,000,000 for knowledge-intensive companies), and CGT deferral relief. Unlike SEIS, EIS targets slightly more established companies but imposes similar eligibility conditions.
For a company to qualify for EIS it must have gross assets under £15 million before investment and £16 million after, fewer than 250 full-time equivalent employees, and must have been carrying on a qualifying trade for no more than seven years (or ten years for knowledge-intensive companies). The maximum a company can raise under EIS in its lifetime is £12 million (£20 million for knowledge-intensive companies). Investors receive 30% Income Tax relief on qualifying shares held for at least three years, CGT exemption on disposal after three years, and CGT deferral by reinvesting gains into EIS shares. Shares must be newly issued ordinary shares with no preferential rights to assets on winding up. Loss relief is available if the shares fall in value. HMRC administers the scheme and companies should seek advance assurance before issuing shares.