Enterprise Investment Scheme (or EIS)

Enterprise Investment Scheme (or EIS): a form of income, capital gains and loss tax relief, that is available to individuals who make equity investments in companies that qualify under the scheme. Under an EIS, individuals can invest up to £1 million per tax year (or £2 million, providing anything above £1 million is invested in one or more ‘knowledge intensive’ companies) into new shares of qualifying companies and may have its income tax liability reduced by 30% of the sum invested. An investor can also be exempt from capital gains tax, provided that when the shares are disposed of, they have been owned by an investor for at least 3 years. The rules surrounding EIS are complex, and individuals should seek independent legal advice to assess their eligibility. For more details as to which companies can qualify and how the scheme works individuals may find it useful to consult the following HMRC Guidance.