What is EIS?

The Enterprise Investment Scheme (EIS) is a UK government tax relief scheme launched in 1994, as the successor to the Business Expansion Scheme, to encourage private investment into early stage unquoted companies.

Since launch the scheme has promoted over £10 Billion of private investment and its success has been credited with the governments more recent introduction of the Seed Enterprise Investment Scheme (SEIS), which specifically targets companies in their first two years looking to raise that first £150,000 in funding.

Risk Warning: Tax relief depends on an individual’s circumstances and may change in the future. In addition, the availability of tax relief depends on the company invested in maintaining its qualifying status.

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Are you a startup looking for help with S/EIS applications? Check out our S/EIS services

Why invest in EIS with SyndicateRoom?

Keep all the tax and other benefits of the Enterprise Investment Scheme

Our investment network is free to join

Choose the businesses you invest in and the Business Angels you invest with

Invest with the knowledge that a business angel has invested their own money into the opportunity, unlike most EIS funds

With a minimum investment amount of £1,000, it’s easy to create a diversified portfolio

EIS tax reliefs

With any EIS investment you can take advantage of the following reliefs on up to £1m of investment made into eligible companies per year:

  • Income tax relief of 30% of your investment. This can be used in the year of investment or carried back one-year prior
  • Capital Gains exemption on profits earned on shares held for a minimum of three years
  • Loss relief, should the company you’ve invested in fail, equivalent to your tax bracket multiplied by your ‘at risk capital’ (the total loss on the shares once income tax relief has been accounted for)
  • Capital Gains deferral on gains realised on the disposal of any asset which is reinvested in an EIS eligible company
  • Inheritance Tax exemption on shares held for a minimum of two years

View EIS Investment Opportunities

Examples of EIS tax relief

Company you’ve invested in doubles in value

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  • You’ve invested £10,000

  • You receive £3,000 in income Tax relief

  • Hold onto the shares for at least 3 years and when you sell them for £20,000, you will owe no capital gains tax on profit

  • Total gain to you is £13,000 (£10,000 from the sale plus £3,000 from the income tax relief)

Company maintains the same value

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  • You’ve invested £10,000

  • You receive £3,000 in income Tax relief

  • You sell your shares for the £10,000 price you paid

  • Total gain to you is £3,000 (Your initial investment was returned plus you received £3,000 from the income tax relief)

Company goes bust

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  • You’ve invested £10,000

  • You receive £3,000 in income Tax relief

  • The company then goes bust and your shares are worth £0

  • You receive loss relief from the government equal to your at risk capital (in this case the £10,000 invested - £3,000 received in Income Tax Relief), multiplied by the percentage tax bracket you belong to. At a tax bracket of 45%, the loss relief will be £7,000 x 45% = £3,150. Therefore, for £10,000 invested, your real loss is £7,000 - £3,150 = £3,850

How to claim your EIS tax relief

Before you can claim EIS tax relief you must have received an EIS3 form from the company in which you have invested. Your claim can be made on the Self-assessment tax return for the tax year in which the shares were issued. If the shares were issued in a previous year, and/or if the claim is for capital gains deferral relief, the claim part of the form must also be completed and sent to your tax office. Claims for relief can be made up to five years after the first 31 January following the tax year in which the investment was made. Carry back is possible on all or part of the investment to the preceding tax year if the limit for relief has not already been exceeded.

For full details feel free to read the HMRC Guidelines

EIS rules and eligibility

In order to qualify for Income Tax relief, you cannot be ‘connected’ to the investee company by significant financial interest or employment. These conditions must be true for the duration of a period starting two years prior to the EIS share issue and lasting until three years after the investment is made.

You are recognised as being connected to the company if you are a paid company employee, partner or director. The exception is if you are an unpaid director of the company, in which case you may still claim Income Tax relief.

You are also connected to the company and therefore ineligible to receive Income Tax relief if you have a 30% or greater interest in the company or any subsidiary (this includes share capital, voting rights and the rights to assets).

No partner or associate of the investor may have other interests in the company.

View our EIS funds