What tax relief is available on EIS investments?
The Enterprise Investment Scheme, or EIS, offers a range of tax reliefs to encourage people to invest in qualifying higher-risk smaller companies. These can include income tax relief on the amount invested and reliefs relating to capital gains. The rules are detailed and the investments carry significant risk.
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Check what you're owed →EIS is a government scheme intended to help smaller, higher-risk companies raise money by giving investors tax incentives. The headline relief is a reduction in your Income Tax bill based on the amount you invest in qualifying shares, subject to limits and conditions, including a minimum period you must hold the shares to keep the relief.
There are further reliefs connected to capital gains, including the ability to defer certain gains by reinvesting them, and potential relief if the investment is eventually sold or becomes worthless, again subject to the rules. The company, the shares and the investor all have to meet specific conditions for the reliefs to apply, and these conditions are strict.
This is a high-level, factual outline rather than advice. EIS investments are higher risk by their nature, the rules are complex, and the tax treatment depends on your own circumstances and the figures involved, which change over time. Anyone considering EIS should check the current rules on GOV.UK and consider taking professional advice before investing.
How to understand EIS tax relief
- Learn the conditions. Read the qualifying conditions for the company, the shares and you as an investor on GOV.UK.
- Understand the reliefs. Get clear on the income tax and capital gains reliefs and the limits and holding periods that apply.
- Weigh the risk. Recognise that EIS investments are higher risk, and consider whether they suit your circumstances.
- Take advice and claim correctly. Consider professional advice and follow the proper process to claim any relief you become entitled to.
Frequently asked questions
- What is the main EIS tax relief?
- A reduction in your Income Tax bill based on the amount invested in qualifying shares, subject to limits, conditions and a minimum holding period.
- Are there capital gains reliefs too?
- Yes. EIS can offer reliefs connected to capital gains, including deferral of certain gains and potential relief on losses, all subject to the rules.
- Is EIS risky?
- Yes. EIS targets higher-risk smaller companies, so the investments carry significant risk alongside the potential tax reliefs.
- Where can I find the current rules?
- Check GOV.UK for the latest EIS rules and limits, and consider professional advice, as the treatment depends on your circumstances.
MoneyFinder is an independent sign-posting service that helps you find financial support you may be entitled to. We are not a government body and do not provide financial advice. Figures are taken from the official sources cited above and were correct when last checked — always confirm current details on the linked GOV.UK pages.