Reflective glass office building
Investor Overview

EIS - Enterprise Investment Scheme Explained

By investing in high-growth startups and scaleups via the EIS,  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

The EIS was introduced in the UK in 1994 with one core mission: to stimulate growth across the startup and scaleup landscape with the support of private investors. Since then the EIS has attracted more than £25 billion of private investment for over 36,000 SMEs, largely thanks to its sought after investor incentives. 

Though the growth-focused nature of the EIS - and its equally significant ability to generate long term positive impact - can be to thank for much of the scheme's investor popularity, the scheme's generous range of tax reliefs is perhaps its most distinctive investor draw. From 30% income tax relief to capital gains tax exemption, these reliefs combine to minimise the risk and maximise the returns associated with venture capital investments.

Glass office building

01 | Income Tax Relief

Up to 30% Income Tax Relief

Investors can claim 30% of the value of their investment back in income tax relief on EIS investments should shares be held for three years. This relief can amount to a maximum reduction of £600,000 per investor per tax year.

Large reflective panelled building

02 | Tax-Free Growth

Capital Gains Tax Exemption

Provided the shares are held for at least three years, EIS CGT exemption means that any gain in the value of EIS shares is CGT and income tax-free.  In turn, this can facilitate 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. To qualify for this relief the gain is invested into a qualifying company within one year prior or three years after it arises.

London SME offices

04 | IHT Relief

Shares Passed on Inheritance Tax-Free

Usually 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 shares.

London seed enterprise hub

05 | Loss Relief

Risk Minimisation with Loss Relief

Should an investor realise a loss in the value of their investment, EIS loss relief  can offset the value of the loss against their income tax bill or CGT bill. This can be a particularly attractive relief in the context of startup investing.

Large cross-hatched architectural structure

06 | Positive Impact

An Inroad to Impact Investing

The EIS offers a range of additional benefits for investments into knowledge intensive companies (KICs). Consequently, it has proven a popular tool for impact investing into  some of the UK's most transformational startups.

Minimise Risk. Maximise Returns.

The GCV Portfolio

Our Most Recent EIS-eligible Opportunities

Having raised over £10 million across EIS qualifying 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 2
Seed
Open For Investment

n-gage.io

Sector: SaaS
Target Sought: £ 500,000
Funds Raised: £ 513,974
Round: Round 2
Investment Type: Equity
Tax Schemes: EIS
Learn More about n-gage.io
Round 3
Growth
Open For Investment

Growth Capital Ventures

Sector: Fintech
Target Sought: £ 1,000,000
Round: Round 3
Minimum Investment: £ 5,000
Investment Type: Equity
Tax Schemes: EIS
Learn More about Growth Capital Ventures
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 3
Growth
Completed

Finexos

Sector: Fintech & Banking
Target Sought: £ 500,000
Funds Raised: £ 695,456
Round: Round 3
Minimum Investment: £ 500
Investment Type: Equity
Tax Schemes: EIS
Learn More about Finexos
Round 3
Series A
Completed

Business Finance Market (trading as Finance Nation)

Sector: Fintech & Banking
Target Sought: £ 250,000
Funds Raised: £ 278,855
Round: Round 3
Minimum Investment: £ 1,000
Investment Type: Equity
Tax Schemes: EIS
Learn More about Business Finance Market (trading as Finance Nation)
Growth
Completed

CoreHaus

Sector: Advanced Manufacturing
Target Sought: £ 2,000,000
Minimum Investment: £ 5,000
Investment Type: Equity
Tax Schemes: EIS
Learn More about CoreHaus

Key Facts

Benefits and Risks of EIS Investments


Similarly to its sister scheme - the Seed Enterprise Investment Scheme (SEIS) - the Enterprise Investment Scheme poses a wealth of generous advantages for investors keen to benefit from the UK's startup landscape. In turn, it can be equally as crucial that investors consider the scheme's risks and limits in a balanced manner before investing.

01
Maximising
Returns

Alongside EIS qualifying companies are required to hit a strict criteria to maximise the potential of long term growth, additional tax benefits of the scheme (such as income tax relief ) can further enhance the potential for net positive returns.

02
Minimising
Risk

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

03
Portfolio
Diversification

Though on the higher end of the risk spectrum (and so likely not making up the entirety of a portfolio), EIS opportunities exist across a broad range of industries. Naturally this can make the scheme a powerful tool for portfolio diversification.

04
Reducing
Tax Bills

Whether it's via deferral relief that can provide flexibility over existing CGT payments, or carry back relief that enables investors to claim relief for the previous financial year, the scheme's reliefs have the power to reduce and reorganise tax bills.

05
Investing up To
£1 Million

Investors can invest up to £1 million via the scheme per tax year (or £2 million providing additional capital is into knowledge intensive companies [KICs]). Though this offers significant potential for growth, investment is limited to qualifying trades.

06
Supporting Growing
Business

EIS rules include limits to ensure eligible companies are early stage and growth-focused. Including a maximum 250 employees and less than £15 million in gross assets, these rules aid in funnelling investment into transformative UK startups.

07
Alternative
Focus

Residing in the alternative investment space, the scheme benefits from advantages including higher resistance to external market volatility. Conversely, the EIS is arguably less liquid than some of its traditional investment counterparts.

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 scheme can enable you to:
  • Claim 30% income tax relief
  • Pay zero capital gains tax when selling shares
  • Defer capital gains tax to following years
  • Pass on your investment free of inheritance tax
  • Claim loss relief should an unexpected event arise
EIS Investment Guide-1

EIS FAQs

Key Questions

Should you have any further queries surrounding the EIS, we have compiled a list of frequently asked questions below.

  • The EIS 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, its 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 30% income tax relief on eligible investments up to £1 million per tax year (£2 million should the excess be invested into knowledge intensive companies). This tax relief alone could amount to maximum potential tax bill reduction of £600,000 per year.

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

  • Different EIS tax reliefs have varying ways of being calculated depending on their purpose. Loss relief, for example, is calculated by multiplying an investor's effective loss (capital loss minus value of tax relief claimed) 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). Additionally, investors cannot have a 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 CGT due on the disposal of any asset (or a gain deferred previously) when the value of that gain is invested into EIS shares.

  • Any investment made via the scheme is exempt from inheritance tax once it has been held for at least two years (the point at which it will qualify for Business Property Relief). This gives shares the ability to be passed on without being liable to the usual 40% IHT due on estates worth over £325,000.

  • The EIS often targets higher, but longer term rates of return following the time of the share issue than many dividend-paying routes such as mature private equity. In doing so, investments made via the scheme will usually not pay regular dividends, and instead will 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 venture capital trusts (VCTs), you are investing indirectly into (usually) between 30-70 companies via a listed fund. These companies are picked by the fund manager, and the performance of them dictates the value of your investment. Varying benefits exist for investing via either route that can make them more or less suitable depending on portfolio goals.

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

Don't invest unless you're prepared to lose all the money you invest. This is a high-risk investment and you are unlikely to be protected if something goes wrong.
Risk Summary

Estimated reading time: 2 min

Due to the potential for losses, the Financial Conduct Authority (FCA) considers this investment to be high risk.

What are the key risks?

  • You could lose all the money you invest
  • Most investments are shares in start-up businesses or bonds issued by them. Investors in these shares or bonds often lose 100% of the money they invested, as most start-up businesses fail.
  • Checks on the businesses you are investing in, such as how well they are expected to perform, may not have been carried out by the platform you are investing through. You should do your own research before investing.

You won't get your money back quickly

  • Even if the business you invest in is successful, it will likely take several years to get your money back.
  • The most likely way to get your money back is if the business is bought by another business or lists its shares on an exchange such as the London Stock Exchange. These events are not common.
  • Start-up businesses very rarely pay you back through dividends. You should not expect to get your money back this way.
  • Some platforms may give you the opportunity to sell your investment early through a 'secondary market' or 'bulletin board', but there is no guarantee you will find a buyer at the price you are willing to sell.

Don't put all your eggs in one basket

  • Putting all your money into a single business or type of investment for example, is risky. Spreading your money across different investments makes you less dependent on any one to do well. A good rule of thumb is not to invest more than 10% of your money in high-risk investments. Learn more here.

The value of your investment can be reduced

  • If your investment is shares, the percentage of the business that you own will decrease if the business issues more shares. This could mean that the value of your investment reduces, depending on how much the business grows. Most start-up businesses issue multiple rounds of shares.
  • These new shares could have additional rights that your shares don't have, such as the right to receive a fixed dividend, which could further reduce your chances of getting a return on your investment.

You are unlikely to be protected if something goes wrong

  • Protection from the Financial Services Compensation Scheme (FSCS), in relation to claims against failed regulated firms, does not cover poor investment performance. Try the FSCS investment protection checker.
  • Protection from the Financial Ombudsman Service (FOS) does not cover poor investment performance. If you have a complaint against an FCA-regulated platform, FOS may be able to consider it. Learn more about FOS protection here.

If you are interested in learning more about how to protect yourself, visit the FCA's website here.

For further information about investment-based crowdfunding, visit the crowdfunding section of the FCA's website here.

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.