Investor Reliefs

We can guide you through the process of obtaining investment through EIS (Enterprise Investment Scheme). This government scheme provides tax relief to investors who want to invest in businesses that meet the criteria outlined below.

EIS is great for SMEs as it provides an added incentive for investors who are considering putting money into your business. Launched in 1994 in succession to the Business Expansion Scheme, EIS is a series of UK tax reliefs designed to encourage investments in small unquoted companies carrying on a qualifying trade in the UK.

By the end of the 2014/15 tax year, a cumulative total of £14.2 billion had been invested under the scheme into approximately 25,000 businesses.

EIS is designed so companies can raise money to help grow their businesses.

It does this by offering tax reliefs to individual investors who buy new shares in a company. Under EIS, businesses can raise up to £5 million each year, and a maximum of £12 million during the business’ lifetime.

This includes amounts received from other venture capital schemes. Companies must receive investment under a venture capital scheme within seven years of its first commercial sale and must follow the scheme rules so that your investors can claim and keep EIS tax reliefs relating to their shares. Tax reliefs will be withheld or withdrawn from investors if the rules aren’t followed for at least 3 years after the investment is made.

There are different rules (see below) for knowledge intensive companies that carry out a significant amount of research, development or innovation.

The rules

The company:

  • Must not have assets greater than £15 million
  • May have no more than 250 full-time equivalent employees
  • Must not be in specific industries such as coal and steel production, farming, leasing, financial services and property development.
  • Must not be listed or have any intention of becoming listed at the time of the investment
  • All capital employed must be actively engaged in the company within 24 months
  • Entry into the scheme is subject to a decision and audit made by an appointed tax officer

The investor:

  • May not have more than a 30% interest in the company
  • Must not have any form of preferential shares
  • Must not have any other form of controlling interest in the company
  • The scheme must not be used for the purposes of avoiding tax
  • No partner or associate of the investor (including spouse, relations, prior business contacts) may have other interests in the company

If you would like to find out more, please don’t hesitate to get in touch.