The Enterprise Investment Scheme (EIS) was introduced in 1994 with the aim to help smaller, higher-risk trading companies to raise equity finance by offering a range of tax reliefs to investors purchasing new shares in those companies.
The scheme allows investors in qualifying companies to claim income tax and capital gains tax relief if the investment is approved under the EIS rules by HM Revenue & Customs (HMRC).
Income tax relief (of 30% on investments of up to £1 million per tax year) and capital gains deferral relief is available on investment. Exemption from capital gains tax and loss relief is available on a disposal of EIS shares.
Read our EIS Investment Guide
The EIS can be a useful tool in an individual’s tax planning and can assist qualifying companies to attract the equity investment they need.
However, there are a number of conditions that must be satisfied in order for the investor to qualify for tax relief under the EIS, both on the part of the investor himself and the company in which he is investing. Please read our EIS Investment Guide for details.