EIS Carry-Back Relief Explained: Splitting Your Investment Across Two Tax Years
How EIS carry-back income tax relief lets you treat an investment as if made in the prior tax year, worked examples splitting a single investment, and the £1m/£2m annual limits for 2026/27.
What is EIS carry-back relief?
The Enterprise Investment Scheme (EIS) is designed to encourage investment in smaller, higher-risk UK companies by offering generous tax reliefs, including 30% income tax relief on the amount invested. Normally, that relief is claimed against the tax year in which the investment is actually made.
Carry-back is an election that lets an investor treat all or part of an EIS investment as if it had been made in the previous tax year instead — meaning the 30% relief reduces the prior year's income tax liability rather than (or as well as) the current year's.
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| Investment type | Annual limit | Relief rate |
|---|---|---|
| Standard EIS-qualifying companies | £1,000,000 | 30% |
| Knowledge-intensive companies (amount above £1m) | Up to £2,000,000 total | 30% |
This means the maximum income tax relief available in a single tax year, before considering carry-back, is:
- £300,000 on a £1 million investment in standard EIS companies, or
- £600,000 on a £2 million investment where the amount above £1 million is in knowledge-intensive companies.
Worked example: splitting an investment across two tax years
Suppose an investor makes a £1.5 million EIS investment in standard (non-knowledge-intensive) qualifying companies in the 2026/27 tax year. Because the standard annual limit is £1 million, they cannot claim full relief on the whole amount in 2026/27 alone unless part is knowledge-intensive. Instead, they elect to carry back £500,000 of the investment to 2025/26, where they made no other EIS investments that year.
| Tax year | Amount treated as invested | Relief claimed (30%) | Against which year's tax liability |
|---|---|---|---|
| 2025/26 (via carry-back election) | £500,000 | £150,000 | 2025/26 |
| 2026/27 (remaining, treated normally) | £1,000,000 | £300,000 | 2026/27 |
| Total | £1,500,000 | £450,000 | Split across two years |
This works because:
- The £500,000 carried back fits within the 2025/26 standard limit of £1,000,000 (assuming no other EIS investment that year).
- The remaining £1,000,000 is within the 2026/27 standard limit.
- The investor ends up claiming relief on the full £1.5 million, just spread across two tax years' liabilities, rather than being capped by a single year's limit.
Why use carry-back at all?
Common reasons investors use carry-back:
- A larger tax liability in the previous year — for example, a one-off bonus, large capital gain, or higher income in the prior year that carry-back relief can now offset.
- Unused annual limit headroom in the prior year — if you didn't invest in EIS at all in the previous tax year, carrying back part of a later investment "fills" that unused capacity.
- Bringing forward the cash-flow benefit — claiming relief against a tax year already assessed can, in some cases, allow for a faster repayment or adjustment to a prior year's liability rather than waiting for the current year's Self Assessment cycle to complete.
How to make the election
The carry-back election is typically made as part of your Self Assessment return (or an amendment to a previously filed return) for the year the relief is being carried back into, supported by the EIS3 certificate issued by the investee company once the qualifying period conditions are met. Because EIS3 certificates are often issued some time after the investment is actually made, investors sometimes only become able to finalise a carry-back claim well after the tax year-end — so it's important to track outstanding certificates and file or amend returns within the applicable time limits.
Interaction with other EIS reliefs
Carry-back relates specifically to income tax relief. It does not change the tax year relevant for:
- Capital Gains Tax exemption on eventual disposal of EIS shares (generally requires the shares to have been held for a minimum period and income tax relief not to have been withdrawn).
- CGT deferral relief, which lets you defer a capital gain from another asset by reinvesting it into EIS shares — this is assessed by reference to when the investment and the original gain actually occurred, not the carried-back year.
Investors considering large or split EIS investments across two tax years should take professional advice, given the interaction between carry-back elections, annual limits, and the separate CGT reliefs available under the scheme.
Use the income tax calculator to see how a carried-back EIS relief claim would change your tax position for a prior tax year.
Frequently asked questions
What is EIS carry-back relief?
EIS carry-back relief lets you elect to treat some or all of an EIS investment made in the current tax year as if it were made in the previous tax year instead, so the 30% income tax relief is claimed against that prior year's tax liability.
How much income tax relief does EIS give?
EIS gives income tax relief of 30% of the amount invested, up to a maximum qualifying investment of £1 million per tax year, or £2 million per tax year if at least the amount above £1 million is invested in knowledge-intensive companies.
Can I split a single EIS investment between two tax years?
Yes. You can elect to carry back part of an investment to the previous tax year while treating the rest as relating to the current tax year, provided the amount carried back stays within the prior year's own £1m/£2m annual limit alongside anything already invested that year.
Why would I use carry-back instead of just claiming relief in the current year?
Carry-back is useful if you had a larger tax liability, or unused annual limit headroom, in the previous tax year, or if you want to bring forward the cash-flow benefit of the tax relief by a year rather than waiting for your current year's return.
Is there a deadline for making an EIS carry-back election?
The election is normally made through your Self Assessment tax return or a separate claim, and is subject to the normal time limits for amending returns, generally within a set number of years after the end of the tax year the investment was actually made in. Check current HMRC guidance for exact deadlines relevant to your situation.
Does carry-back affect Capital Gains Tax reliefs available under EIS?
No. Carry-back relates specifically to income tax relief. Other EIS reliefs, such as CGT deferral relief, generally relate to the tax year the investment and disposal actually occurred, and are considered separately from the income tax carry-back election.
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