Investing
What is EIS? A plain-English guide for investors
The Enterprise Investment Scheme is a UK government scheme that gives individual investors 30% income tax relief on investments of up to £1 million a tax year into qualifying companies, with capital gains and loss reliefs alongside it.
The Enterprise Investment Scheme (EIS) is one of the UK's venture capital schemes. It is designed to help smaller, higher-risk trading companies raise finance by offering a set of tax reliefs to individual investors who buy new shares in them.
For the investor, EIS does not make an early-stage company safer. It changes the arithmetic: how much of the investment the Treasury effectively funds, what a loss ends up costing, and what a gain is worth after tax.
The reliefs
| Relief | What it gives |
|---|---|
| Income tax relief | 30% of the amount invested, on up to £1 million a tax year (£2 million if the excess is in knowledge-intensive companies). |
| Capital gains exemption | No capital gains tax on a gain when EIS shares are sold, provided income tax relief was claimed and the shares were held three years. |
| Deferral relief | A gain from any asset can be deferred by reinvesting it into EIS shares. |
| Loss relief | A loss, net of income tax relief already received, can be set against income or gains. |
Income tax relief can also be carried back to the previous tax year, subject to that year's limit. The full conditions are in HMRC's guidance on tax relief for investors using venture capital schemes.
Which companies qualify
The company must be carrying on a qualifying trade, must not be listed on a main stock exchange, and must meet limits on its age, size and the amount it has raised. From 6 April 2026 the company limits increased: a qualifying company can raise up to £10 million a year and £24 million over its lifetime, rising to £20 million and £40 million for knowledge-intensive companies, with gross assets of no more than £30 million immediately before the share issue.
The money raised must be used for a qualifying business activity, and generally within two years. Relief depends on the company keeping its qualifying status for three years after the investment, which is outside the investor's control.
EIS and SEIS together
SEIS is the seed-stage scheme: 50% income tax relief, a £200,000 annual investor limit and much smaller companies. EIS is the follow-on: a lower rate of relief, a far higher limit, and companies slightly further along. Many venture-built companies raise under SEIS first and EIS later. The comparison is set out in SEIS vs EIS and the SEIS scheme in full at the SEIS hub.
How EIS income tax relief works in practice, including carry back.
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Written by
Craig Peterson
Co-Founder and Chief Operating Officer, GCV Labs
Craig Peterson is Co-Founder and Chief Operating Officer of GCV Labs, where he has helped create, launch and scale technology-enabled ventures including Intelligence Fusion, n-gage.io, Business Finance Market, Valius Global and Quva.
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Investing
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