Reflective glass office building
Investor Guide

Enterprise Investment Scheme (EIS)

By investing in high-growth startups and scaleups via the Enterprise Investment Scheme,  investors can unlock a host of tax reliefs (including 30% income tax relief) whilst balancing their portfolio to achieve maximum positive impact.

Firstname Lastname & Firstname Lastname

Position & Position, Company

What is the EIS?

One of the UK's Most Popular Tax Efficient Investment Schemes

Introduced in 1994 to help provide promising UK startups and scaleups with the funds they require to grow, since then the EIS has raised more than £25 billion of private investment for over 36,000 SME's, in part due to the generous tax reliefs the scheme offers investors.

Alongside its ability to facilitate the purchase of shares into early stage companies, the scheme's range of tax advantages (from 30% income tax relief to capital gains tax exemption) has long been a draw for experienced investors keen to minimise the risk and maximise the returns of their venture capital investments via tax efficient routes. 

Combine with this the Enterprise Investment Scheme's direct ability to access the impact investing market via its additional benefits for investing in knowledge intensive companies (KICs), and it comes as no surprise that the EIS is one of the UK's most popular route for investing in early stage, higher risk companies.

Glass office building

01 | Income Tax Relief

Up to 30% Income Tax Relief

Investors can claim 30% income tax relief with EIS investments (up to a maximum reduction of £300,000 per tax year, or £600,000 in the case of knowledge-intensive companies [KICs]) should shares be held for at least three years.

Large reflective panelled building

02 | Tax-Free Growth

Capital Gains Tax Exemption

Provided the shares are held for at least three years, EIS capital gains tax relief means that any gain in the value of EIS shares is CGT and income tax-free, facilitating  the opportunity for considerable tax-free growth over time.

Highrise London private equity building

03 | CGT Deferral

Capital Gains Tax Deferral Relief

EIS deferral relief allows investors to defer the payment of CGT due from the sale of any type of asset (provided the gain is invested into an EIS-eligible company within one year prior or three years after it arises).

London SME offices

04 | IHT Relief

Shares Passed on Inheritance Tax-Free

Whereas in the UK all inheritance valued over £325,000 is liable to a 40% inheritance tax rate, with EIS inheritance tax relief investors can benefit from full inheritance tax exemption on the value of their EIS shares.

London seed enterprise hub

05 | Loss Relief

Risk Minimisation with Loss Relief

In the event that a loss is realised on an EIS investment (as can be the case with higher risk options such as startup investing), EIS loss relief allows an investor to offset the value of their loss against their income tax bill or CGT bill.

Large cross-hatched architectural structure

06 | Positive Impact

An Inroad to Impact Investing

Offering additional benefits for investment into knowledge intensive companies (KICs), the EIS  has proven a popular tool for impact investing into  some of the UK's most transformational startup and scaleups.

Minimise Risk. Maximise Returns.

The GCV Portfolio

Our Most Recent EIS-eligible Opportunities

Having raised over £10 million across EIS-eligible investment rounds for a broad range of portfolio companies, at GCV we possess a wealth of experience in originating and facilitating growth-focused, impact-driven EIS investment opportunities.

Left Arrow
Right Arrow
Round 3
Series A
Open For Investment

Business Finance Market (trading as Finance Nation)

Sector: Fintech & Banking
Target Sought: £ 250,000
Funds Raised: £ 269,960
Round: Round 3
Minimum Investment: £ 1,000
Investment Type: Equity
Tax Schemes: EIS
Learn More about Business Finance Market (trading as Finance Nation)
Round 1
Completed

Hive.Hr

Sector: HR Tech
Target Sought: £ 150,000
Funds Raised: £ 303,000
Round: Round 1
Investment Type: Equity
Tax Schemes: EIS, SEIS
Learn More about Hive.Hr
Round 1
Completed

Intelligence Fusion

Sector: SaaS
Target Sought: £ 400,000
Funds Raised: £ 556,800
Round: Round 1
Investment Type: Equity
Tax Schemes: EIS, SEIS
Learn More about Intelligence Fusion
Round 2
Completed

Hive.Hr

Sector: HR Tech
Target Sought: £ 300,000
Funds Raised: £ 1,150,000
Round: Round 2
Investment Type: Equity
Tax Schemes: EIS
Learn More about Hive.Hr
Round 1
Completed

QikServe

Sector: Fintech
Target Sought: £ 2,500,000
Funds Raised: £ 2,624,694
Round: Round 1
Investment Type: Equity
Tax Schemes: EIS
Learn More about QikServe
Round 1
Completed

n-gage.io

Sector: SaaS
Target Sought: £ 150,000
Funds Raised: £ 170,000
Round: Round 1
Investment Type: Equity
Tax Schemes: EIS, SEIS
Learn More about n-gage.io
Round 1
Completed

Business Finance Market (trading as Finance Nation)

Sector: Fintech & Banking
Target Sought: £ 150,000
Funds Raised: £ 225,000
Round: Round 1
Investment Type: Equity
Tax Schemes: EIS, SEIS
Learn More about Business Finance Market (trading as Finance Nation)
Round 1
Completed

Growth Capital Ventures

Sector: Fintech
Target Sought: £ 500,000
Funds Raised: £ 561,000
Round: Round 1
Investment Type: Equity
Tax Schemes: EIS, SEIS
Learn More about Growth Capital Ventures
Round 2
Completed

Growth Capital Ventures

Sector: Fintech
Target Sought: £ 1,000,000
Funds Raised: £ 1,290,410
Round: Round 2
Investment Type: Equity
Tax Schemes: EIS, SEIS
Learn More about Growth Capital Ventures
Round 2
Super Seed
Completed

Business Finance Market (trading as Finance Nation)

Sector: Fintech & Banking
Target Sought: £ 1,000,000
Funds Raised: £ 800,000
Round: Round 2
Investment Type: Equity
Tax Schemes: EIS
Learn More about Business Finance Market (trading as Finance Nation)
Round 1
Growth
Completed

Finexos

Sector: Fintech & Banking
Target Sought: £ 500,000
Funds Raised: £ 695,456
Round: Round 1
Minimum Investment: £ 500
Investment Type: Equity
Tax Schemes: EIS
Learn More about Finexos

Key Facts

Benefits and Risks of EIS Investments

Whilst the Enterprise Investment Scheme poses a wealth of generous advantages for venture capital investors keen to benefit from the UK's burgeoning startup landscape - similarly to its sister scheme, the Seed Enterprise Investment Scheme (SEIS) - before making any investment via the EIS, it's important that the scheme's limits and risks are also considered in a balanced manner.

01
Maximising
Returns

Alongside EIS-eligible companies being required to hit a strict criteria to ensure the best chance of long term growth, additional tax benefits of EIS investments (including 30% income tax relief and capital gains tax exemption) can further enhance the potential for positive returns.

02
Minimising
Risk

Though investing in startups does offer the potential for significant growth when compared to more mature routes such as private equity, with that higher growth comes higher risk. Through tax reliefs such as loss relief the EIS can minimise the potential for capital losses.

03
Portfolio
Diversification

Though EIS investments sit on the higher end of the risk spectrum (and so may not make up the entirety of a portfolio), EIS opportunities exist across a broad range of industries with varying degrees of target growth, making them a powerful tool for portfolio diversification.

04
Reducing
Tax Bills

Whether it's through deferral relief that can push back CGT payments due from the sale of other assets, or EIS relief carry back that enables you to claim relief on the income tax paid the previous financial year, the EIS has the potential to reduce tax bills considerably.

05
Investing up To
£1 Million

UK investors can invest up to £1 million in EIS shares per tax year, rising to £2 million providing the additional capital is into knowledge intensive companies (KICs). Though this offers significant potential for capital growth, the EIS does limit investment to qualifying trades.

06
Supporting Growing
Business

To promote impact investing into the next wave of transformative UK startups , EIS rules include a list of qualifying criteria to ensure eligible companies are early stage and growth-focused (such as a  maximum 250 employees and less than £15 million in gross assets).

07
Alternative
Focus

Residing in the alternative investment space, the EIS benefits from advantages including higher resistance to external volatility and stock market fluctuations, though some consider it to be more illiquid than traditional asset classes such as stocks and shares.

Portfolio Diversification.
Superior Returns.

Free Investor Guide

Enterprise Investment Scheme.

For investors interested in supporting high-growth, early-stage businesses, the EIS is one of the most generous tax incentives to aid in maximising returns and minimising risk.
This free guide gives an in-depth insight into how the EIS can enable you to:
  • Claim 30% income tax relief
  • Pay zero capital gains tax when selling EIS shares
  • Defer capital gains tax to following years
  • Pass on your investment free of inheritance tax
  • Claim loss relief should an unexpected event arise
Growth Capital Ventures EIS guide

Enterprise Investment Scheme
FAQs

Key Questions Relating to the EIS

Should you have any further queries surrounding the Enterprise Investment Scheme and the tax efficient investing space, we have compiled a list of frequently asked questions to help answer them. 

  • The EIS (Enterprise Investment Scheme) is a government backed investment scheme introduced in the UK in 1994 to connect promising startups and scaleups with private investors. Having raised over £24 billion for more than 33,000 SMEs in that period, the EIS's rapid growth in popularity can be partly attributed to the range of generous tax reliefs it offers investors.

  • EIS income tax relief allows investors to claim up to 30% income tax relief on EIS investments up to £1 million per tax year, rising to £2m should the excess be invested into knowledge intensive companies (KICs). This tax relief alone could amount to maximum potential investor saving of £600,000 per year.

  • Some EIS tax reliefs (such as capital gains tax exemption) are automatic reliefs and so no process is required to claim them. For those that do require action though, reliefs are usually claimed either by submitting an EIS3 form directly to the HMRC, or by including the details of any EIS eligible investments upon completion of their annual tax return

  • Different EIS tax reliefs have varying ways of being calculated depending on their purpose. When examining EIS loss relief, this is claimed when an investor offsets a loss against their income tax bill for the current or previous tax year, with the amount able to be claimed being calculated by multiplying their effective loss by their marginal rate of income tax.

  • In order to be eligible to claim EIS relief, investors are required to be UK residents (or have UK tax liabilities). Investors cannot be employed by or have otherwise significant financial connection to the portfolio company at least two years prior and three years after the investment is made.
  • Deferral relief allows an investor to defer the capital gains tax (CGT) due on the disposal of any asset (or a gain deferred previously) when the value of that gain is invested in EIS shares.

  • EIS investments are exempt from inheritance tax once they have been held for at least two years (the point at which they qualify for Business Property relief - BPR). This gives EIS shares the ability to be passed on without being liable to the usual 40% IHT due on estates worth over £325,000.

  • EIS investments often target higher, but longer term rates of return than many traditional, dividend-paying routes such as mature private equity, and in doing so will usually not pay regular dividends themselves. Instead EIS investments pay the full sum of the return when the company exits, often via an IPO (initial public offering) or sale.

  • Where the EIS facilitates direct investment into a single eligible company, when you invest through a venture capital trust (VCT), you are investing indirectly into (usually) between 30 and 70 companies via a listed fund. These companies are picked by the fund manager, and the performance of them dictates the value of your investment. A range of benefits of investing into either the EIS and VCTs exist that can make the routes more or less suitable to an investor depending on their portfolio goals.

  • The primary difference between the EIS and SEIS is that the SEIS is targeted at especially early stage startups, and so consequently its eligibility requirements are more restricted and its tax reliefs for investors more generous (in order to offset the added risk). Though adopting a more lenient eligibility criteria in terms of company size, the EIS is still targeted at early stage UK companies.

Driving Growth.
Creating Value.
Delivering Impact.

Backed by

Growth Capital Ventures (GCV) is backed by funds managed by Maven Capital Partners, one of the UK’s leading private equity and alternative asset managers.