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Enterprise Investment Scheme

Have you attracted a business Angel?

The Enterprise Investment Scheme (EIS) is designed to help smaller trading companies to raise finance by offering a range of tax reliefs to investors who purchase new shares in those companies.

The EIS applies to qualifying unquoted trading companies whose gross assets are less than £15m immediately before the shares are issued and less than £16m immediately after. A maximum of £5m can be raised using the EIS Scheme in a 12 month period.

An individual can invest up to £1m in EIS companies in a tax year, provided they and their associates do not control more than 30% of the share capital or loan capital and share capital and are not employees or executive directors of the company, to get the income tax relief and CGT exemption. These limits do not apply to the CGT deferral

There are really two separate schemes within EIS:

  • a scheme giving income tax relief of 30% on the investment and a CGT exemption on gains made when the shares are disposed of (provided they are held for at least 3 years) and/or
  • a scheme aimed at providing a CGT deferral.

An individual can take advantage of either or both of these schemes.

Our team of experts can provide consultancy and help to guide you through the implementation of a scheme. The EIS scheme has a number of strictly-applied rules and structuring of the scheme is of vital importance, since if any of these rules are breached, the scheme could fail and investors would lose the reliefs already received.

There is also a similar scheme for very small companies or small start-ups, the Seed Enterprise Investment Scheme, which runs alongside the EIS Scheme.