The short version: The Enterprise Investment Scheme (EIS) gives you tax relief when you invest in early stage companies. It’s designed to encourage investment in smaller, higher risk businesses that might struggle to raise money otherwise.
What tax relief do you get?
Income Tax relief lets you claim back a percentage of your investment. Capital Gains Tax relief means if you hold the shares long enough and sell at a profit, you won’t pay CGT. You can also defer CGT from other gains by reinvesting in EIS companies. And if the company fails, you can claim loss relief against your Income Tax.
What are the rules?
There are limits on how much you can invest each year and still claim relief. The company has to be EIS qualifying, which means it needs to meet criteria around size, age, and what it does. You also need to hold the shares for a minimum period to keep the tax benefits.
Is it worth it?
The tax breaks are generous, but these are high risk investments. Many startups fail. The tax relief softens the blow if things go wrong, but it doesn’t eliminate the risk. Only invest money you can afford to lose.
Thinking about EIS investment and want to understand the tax implications? We can walk you through how it works.
