How does the EIS scheme work?

You buy new shares in early-stage UK companies that qualify for the scheme, directly or through an EIS fund. In return, you can claim 30% income tax relief, pay no capital gains tax on profits after three years, defer existing gains, claim loss relief on failures, and qualify for inheritance tax relief after two years (if shares are held at time of death).

How much can you invest in EIS?

Up to £1 million per tax year qualifies for relief — £2 million if all amounts above £1 million are invested in knowledge-intensive companies. Your relief is also capped by the income tax you pay: you cannot claim back more tax than you owe.

How long must I hold EIS shares?

Three years minimum from issue (or from the start of trading, if later). Sell earlier, and some or all of your income tax relief is clawed back, and any gain becomes taxable.

What is EIS clawback?

If you dispose of EIS shares within three years, HMRC recovers some or all of the initial income tax relief. The amount depends on the sale proceeds and whether the disposal was at a gain or a loss.

Do you pay capital gains tax on EIS shares?

No — profits on EIS shares held for at least three years are free of capital gains tax, provided you claimed (and kept) income tax relief on the investment. Sell within three years, and gains are taxable as normal.

How do I defer a capital gain using EIS?

Reinvest the gain into EIS-qualifying shares within one year before or three years after the disposal. The gain is deferred for as long as the money stays in EIS — and can be deferred again by reinvesting. How EIS capital gains deferral works .

How does EIS loss relief work?

Your allowable loss is the amount invested minus the income tax relief received. You can set it against income tax or capital gains tax at your marginal rate. Example: a £1,000 holding fails; after £300 initial relief, your loss is £700; at the 45% rate, loss relief returns £315. How EIS loss relief works in detail .

Do EIS shares qualify for inheritance tax relief?

Yes. EIS shares are unquoted business assets and attract 100% Business Relief once held for two years — within the £2.5 million per-person allowance that applies from 6 April 2026 (transferable between spouses, and shared across all your business and agricultural assets). Qualifying value above the allowance receives 50% relief. EIS and inheritance tax .

Can EIS relief be carried back or forward?

Back, yes — relief can be applied to the tax year before the investment. Forward, no — unused relief cannot be carried into future years.

What types of company qualify for EIS?

Broadly: first commercial sale within seven years, gross assets under £30 million, fewer than 250 employees, and a qualifying trade. Knowledge-intensive companies have higher limits.

Can you sell EIS shares?

Yes, but early-stage shares are illiquid — there are few secondary markets. Most investors realise value when a company is acquired or lists publicly. Plan to hold for the long term.

Are AIM shares eligible for EIS?

Sometimes. Only new shares you subscribe for at issue can qualify — never shares bought on the secondary market — and the company itself must still meet the EIS conditions. Being listed on AIM doesn't, by itself, make a company EIS-eligible; many AIM companies are too large or too established to qualify.

How long do EIS3 certificates take?

Typically, around 8 weeks from the shares being issued, and up to 12 weeks if HMRC processing takes longer. Certificates for investments made through advance subscription agreements can take longer still. Access EIS investors can track every certificate from their dashboard.

What is the difference between an EIS fund and investing directly?

Direct investment means picking companies yourself and taking concentrated risk. A fund spreads your investment across a managed portfolio — Access EIS builds portfolios of 30+ companies — and handles deal selection and paperwork.

The Enterprise Investment Scheme (EIS) 2026/27 guide

Tax treatment depends on individual circumstances and may change

Syndicate Room

August 7, 2026

•

5 min read

Last updated August 3rd 2026

What is the Enterprise Investment Scheme?

The Enterprise Investment Scheme is a UK government initiative that has channelled private capital into early-stage companies since 1994 — over £30 billion to date. In the 2024/25 tax year alone, 3,735 companies raised £1,575 million under the scheme (HMRC, May 2026). In return for taking early-stage risk, investors receive one of the most generous packages of tax reliefs available in the UK.

The scheme gives UK tax-paying investors 30% income tax relief on investments of up to £1 million per tax year. This allowance increases to £2 million when anything above the first million is invested in Knowledge-Intensive Companies. Gains on shares held for three years are tax-free, losses attract relief, and shares qualify for inheritance tax relief after two years. The scheme was recently extended until at least April 2035.

30%

income tax relief

£1m–£2m

annual limit

CGT after 3 years

2 years

to IHT relief (held at death)

What tax reliefs does EIS offer in 2026/27?

Five separate reliefs apply. Together, they change the risk-reward mathematics of backing early-stage companies.

Tax treatment depends on individual circumstances and may be subject to change. The availability of tax relief depends on the company maintaining its qualifying status.

30% income tax relief.

Invest £10,000 and reduce your income tax bill by £3,000. You can apply the relief to the year you invest or carry it back one tax year. How to claim EIS tax relief.

Tax-free growth.

Pay no capital gains tax on profits from EIS shares held for at least three years, provided income tax relief was claimed and not withdrawn. How the five reliefs fit together.

Loss relief.

If a company in your portfolio falls in value, you can offset the at-risk capital against income tax or capital gains at your marginal rate. How EIS loss relief works.

Capital gains deferral.

Defer a gain from selling any asset by reinvesting it in EIS shares, with no limit on the amount. The gain stays deferred for as long as it remains invested. Deferring a capital gain with EIS.

Inheritance tax relief.

EIS shares qualify for inheritance tax relief via Business Relief once held for two years

(if still held at death), within the £2.5 million per-person allowance that applies from 6 April 2026 and is shared across all your business and agricultural assets. Above the allowance, relief falls to 50%. EIS and inheritance tax.

Who can claim EIS relief?

Most UK taxpayers can claim EIS relief. The main exclusions: you cannot be connected to the company — broadly, employees and anyone holding more than 30% of its shares — and your income tax relief cannot exceed the income tax you actually pay in the year. If you are unsure about your position, speak to a qualified tax adviser.

What is EIS tax relief actually worth? (worked examples)

The three outcomes below assume a £10,000 investment by an additional-rate taxpayer, held for the full qualifying period. In all scenarios, the initial income tax relief cuts the cost to £7,000.

What happens to the company determines the remaining relief and any capital returned.

	Company fails	Breaks even	Doubles in value
EIS investment	£10,000	£10,000	£10,000
Income tax relief	−£3,000	−£3,000	−£3,000
Net investment	£7,000	£7,000	£7,000
Proceeds on disposal	£0	£10,000	£20,000
Loss relief	−£3,150	—	—
CGT payable	—	nil	nil
Net profit/loss (incl. income tax relief)	−£3,850	+£3,000	+£13,000

Calculations based on an additional-rate taxpayer. Combined, the reliefs cap downside exposure at 38.5p per £1 invested for a 45% taxpayer, provided the reliefs are claimed and retained — while gains remain untaxed. Illustration only. Tax Reliefs are subject to status and change.

Want to model your own numbers first?

It's very important that people are aware that these investments could fail completely. That's why I'm a firm believer that SEIS and EIS investing is not a one-off.

Aled Phillips|Niche Private Clients, SyndicateRoom Angel Insights

Listen to Aled Phillips of Niche Private Clients on Angel Insights.

How risky is EIS investing?

EIS companies are young, unquoted and unproven, and most do not work out. Of the 5,393 UK startups in SyndicateRoom's analysis, 38% were a total loss: the holding was written off or sold for nothing. On the wider measure, which counts total losses plus companies that survive without ever reaching an exit and thus never return capital, SyndicateRoom's market analysis puts the figure at 60% to 70%.

Success is concentrated and rare. In the same analysis, the top 6% of companies generated 80% of total portfolio value, and no method reliably identifies them in advance. Across more than 300,000 UK investor records, just 183 investors (0.06%) have a track record of returning more than five times their capital across portfolios of eight or more companies. All of them already held 8 or more companies, so breadth alone was not what set them apart.

183 out of 300,000

The number of UK investors with a 5x+ track record across 8+ companies, from SyndicateRoom's analysis of 300,000 investor records.

If returns are concentrated in that small a minority, what matters is not which companies you pick but how many chances you give yourself of holding one. Our white paper, The Mathematics of UK Venture Capital, by SyndicateRoom CEO Graham Schwikkard, looks into the data behind diversification.

The generous tax reliefs reduce the cost of that outcome. They do not prevent it. On a £10,000 investment that fails completely, income tax relief and loss relief still leave an additional-rate taxpayer £3,850 down.

Three further risks matter as much as the failure rate.

Illiquidity.

There is no meaningful secondary market for EIS shares. The minimum hold for relief is three years, but the realistic route to an exit is seven to ten years and sometimes longer. This is not money you can call back if your circumstances change.

Dilution.

Companies that do well usually raise again. Later rounds issue new shares, and your stake falls unless you invest again.

Relief can be lost.

Income tax relief is clawed back if you sell within three years, and depends on the company keeping its qualifying status for that period. Tax treatment depends on your individual circumstances and may change.

How do you invest in EIS?

You can invest in EIS in three ways: directly into a single company or through an EIS fund (which may or may not be an HMRC-approved fund, which is only significant for how you claim the EIS relief). The choice comes down to how much of the work you want to do yourself, and how much diversification you end up with.

Investing directly means picking companies one at a time, usually through a platform or an angel syndicate, and building any diversification by hand. An EIS fund does the sourcing and diligence for you and spreads a single subscription across a portfolio, though how wide that portfolio goes varies considerably between managers. An HMRC-approved fund works similarly, but invests in a fixed portfolio and lets you claim relief against the fund itself for the tax year in which the fund closes, rather than for each company as it issues its EIS certificate.

	Direct investment	Through an EIS fund
Time required	High. You source, assess and manage each holding	Low. Selection and diligence are done for you
Diversification	Depends on how many companies you back individually	Built in, though often modest: the typical EIS fund targets around 8 companies
Typical minimum	Varies by platform and round	Commonly £10,000 to £25,000
EIS3 paperwork	The company provides the EIS certificate directly to you	The fund provides one certificate for each underlying company
Best suited to	Investors who want to pick companies themselves	Investors who want EIS exposure without doing the picking

The SyndicateRoom funds currently open are listed below.

Is EIS right for you?

This is not advice. If you are unsure whether EIS fits your circumstances, speak to a qualified financial adviser. Tax treatment depends on individual circumstances and may change.

EIS suits investors who can leave the money alone for seven to ten years or more, who pay enough UK income tax to make use of the relief, and who treat early-stage companies as one part of a diversified portfolio rather than a concentrated position.

It is a poor fit if you may need the money back, if you are investing for income, or if you want lower-risk exposure to growth. Relief is also capped by the income tax you actually pay in the year, so if your liability is small, the headline 30% is worth less to you than it looks.

A single EIS holding is not diversification. The mathematics applies to portfolios, not to individual bets, and an investor who takes the risks seriously typically holds many companies rather than a favourite few.

Want to chat more about SyndicateRoom? Schedule a call with Tom Britton.

What are the alternatives to EIS?

Investors weighing EIS usually consider three alternatives: SEIS, VCTs and ISAs. The reliefs differ, but the real comparison is how much risk you are being paid to take, and how long your money is tied up.

	EIS	SEIS	VCT	ISA
What you invest in	Shares in individual unquoted companies, generally under seven years old	Shares in individual companies under three years old with fewer than 25 employees	Shares in a listed fund that holds the underlying companies	A wrapper around whatever you hold inside it
Income tax relief	30%	50%	20%, from 6 April 2026	None
Annual investment limit	£1m, or £2m where the excess is invested in knowledge-intensive companies	£200,000	£200,000	£20,000
Minimum holding period	3 years	3 years	5 years	None
Access to your money	No meaningful secondary market. Exits typically 7 to 10 years	No meaningful secondary market. Exits typically 7 to 10 years	Listed, but usually sold back to the manager at a discount	Withdraw at any time
Capital gains tax on gains	None	None	None	None
Defer or reduce an existing gain	Yes, with no limit on the amount	Reinvestment relief exempting 50% of the gain reinvested, on up to £100,000 of gain	No	No
Loss relief	Yes	Yes	No	No
Inheritance tax relief	Business Relief after 2 years	Business Relief after 2 years	No	No
Dividends	Taxed as normal	Taxed as normal	Tax-free	Tax-free

Read the full comparisons of EIS and SEIS, EIS and VCTs and EIS and ISAs.

Business Relief gives 100% relief within the £2.5 million per-person allowance that applies from 6 April 2026, and 50% above it. That allowance is shared across all business and agricultural assets and is transferable between spouses. Tax treatment depends on individual circumstances and may change. Reliefs also depend on companies maintaining qualifying status.

Which companies qualify for EIS?

To qualify for EIS funding, a company must meet all of the following at the time of investment:

Have made its first commercial sale within the last seven years
Hold gross assets of under £30 million immediately before the investment
Employ fewer than 250 full-time equivalent staff
Have raised no more than £10 million in the previous 12 months, and no more than £24 million over its lifetime
Carry out a qualifying trade

Most trades qualify. The exclusions are largely asset-backed and financial: dealing in land, shares or commodities, banking and insurance, property development, farming and market gardening, leasing and asset hire, and running hotels or care homes. A company is disqualified only where excluded activities form a substantial part of its trade, not where it touches one incidentally.

What is a knowledge-intensive company?

A knowledge-intensive company is one carrying out significant research, development or innovation, tested on how much of its operating costs go to R&D and on the proportion of staff in skilled roles. Five things change if a company meets the definition:

You can invest £2 million a year rather than £1 million, with everything above £1 million going into knowledge-intensive companies
The company can raise £20 million in a 12-month period rather than £10 million
Its lifetime limit is £40 million rather than £24 million
It has 10 years from its first commercial sale, or from annual turnover passing £200,000, rather than seven
It can employ up to 500 full-time equivalent staff rather than 250

Gross assets are capped at £30 million either way.

EIS: Frequently Asked Questions

Through your self-assessment return — the SA101 additional information pages — using the EIS3 certificate (or EIS5 for approved knowledge-intensive funds) issued after the company's shares are allotted. You'll need each company's name, the amount claimed, the share issue date and the certificate's Unique Investment Reference (UIR). You can claim for the current tax year or carry the relief back one year. Step-by-step claiming guide.

A company carrying out significant research, development or innovation at the time it issues shares — broadly, one that spends a high proportion of operating costs on R&D, creates and uses original intellectual property, or has at least 20% of its workforce in R&D roles requiring higher-education qualifications. Knowledge-intensive companies can raise more under EIS, and investors backing them get the higher £2 million annual relief limit.

Free guide: Understanding EIS

Everything on this page, in depth: relief mechanics, qualifying rules, worked examples and how to claim — in one downloadable guide.

Download your free Understanding EIS guide

Everything on this page, in depth: relief mechanics, qualifying rules, worked examples and how to claim — in one downloadable guide. Register to download.