EIS Enterprise Investment Scheme: 30% Tax Relief Guide 2026/27

The Enterprise Investment Scheme (EIS) helps growing UK businesses raise equity finance by offering generous tax incentives to investors. With 30% income tax relief on investments up to GBP 1 million per year -- rising to GBP 2 million for Knowledge Intensive Companies -- EIS is one of the cornerstone reliefs for active UK investors. Here is the complete guide for 2026/27.

What Is EIS?

EIS was launched in 1994 to channel private investment into small and medium-sized UK businesses at the growth stage. Unlike SEIS, which targets the very earliest seed phase, EIS companies have usually been trading for at least a short period and are looking for capital to scale.

The scheme operates on a straightforward principle: in exchange for taking on the risk of investing in qualifying companies, HMRC rewards you with a substantial package of income tax, CGT, and inheritance tax reliefs.

The Tax Reliefs Available

30% Income Tax Relief

You can claim back 30% of the amount you invest against your income tax liability for the year. The relief is capped at the amount of tax you owe, so you need a tax bill of at least GBP 30,000 to absorb the maximum relief on a GBP 100,000 investment.

You can carry back up to GBP 1,000,000 of EIS investment to the previous tax year, which lets you use relief against last year's income tax bill and potentially accelerate your cash benefit.

CGT Exemption on Growth

Any capital gain on EIS shares is exempt from CGT provided:

• You have held the shares for at least three years
• The income tax relief has not been withdrawn

This is particularly powerful for growth-stage businesses where the value can increase significantly from your entry point.

CGT Deferral

If you have made a taxable capital gain on any asset (not just shares), you can defer that gain by reinvesting it into EIS shares. The deferred gain is not immediately chargeable and becomes taxable when you eventually sell the EIS shares or cease to qualify.

There is no upper limit on the gain you can defer, and you can invest within one year before or three years after the gain arises.

Inheritance Tax Relief

EIS shares that qualify for Business Property Relief (BPR) are typically free from inheritance tax after two years of ownership. This adds a further dimension to the tax efficiency of long-term EIS holdings, though BPR and EIS reliefs are governed by separate rules.

Loss Relief

If your EIS investment fails, you can claim loss relief on the net loss after income tax relief. This loss can be set against income or capital gains. For a higher-rate taxpayer, the effective downside is substantially reduced.

Investment Limits for 2026/27

• Standard EIS limit: GBP 1,000,000 per tax year
• Knowledge Intensive Companies (KICs): GBP 2,000,000 per tax year (the additional GBP 1,000,000 must go into KICs)

What Qualifies as an EIS Company?

For a company to issue EIS-qualifying shares it must:

• Be UK-incorporated and carrying on a qualifying trade
• Have gross assets of no more than GBP 15 million before the share issue and GBP 16 million after
• Have fewer than 250 full-time employees (500 for KICs)
• Not be listed on a recognised stock exchange (AIM shares can qualify)
• Have received no more than GBP 12 million in total EIS/SEIS/VCT investment (GBP 20 million for KICs)
• Have been carrying on its trade for no more than 7 years (10 for KICs)

Excluded sectors include banking, insurance, property development, legal and accountancy services, and farming.

Knowledge Intensive Companies (KICs)

KICs are a subset of EIS-qualifying companies engaged in significant research, development, or innovation. To qualify as a KIC, a company must satisfy one of:

• At least 15% of operating costs are R&D or innovation costs (in any one of the last three years)
• At least 10% of operating costs are R&D or innovation costs in each of the last three years
• The company is creating or has created intellectual property that is expected to form the core of its business

KICs attract the doubled GBP 2 million investor limit and have more time to raise EIS funding (10 years vs 7).

EIS vs SEIS: A Direct Comparison

For investors with larger capital to deploy, EIS allows much higher limits. The 30% relief is lower than SEIS but the companies are generally less speculative.

BADR and EIS -- A Note on Compatibility

Business Asset Disposal Relief (BADR) reduces CGT to 18% for qualifying business disposals. EIS shares that qualify for CGT exemption do not need BADR -- they are entirely exempt. However, if you defer a capital gain into EIS shares, BADR may still apply to the original gain when it crystallises, depending on circumstances. Tax planning across both reliefs requires careful structuring.

How to Claim EIS Relief

1. The company applies to HMRC for EIS advance assurance before the share issue
2. After shares are issued, the company applies for and sends you an EIS3 certificate
3. You claim relief on your Self Assessment tax return using the EIS3 certificate
4. To carry back, tick the relevant box on your return or write to your HMRC office

Ensure you receive your EIS3 certificate before filing your return, as HMRC will not accept claims without it.

Key Risks

EIS investments carry significant risk. The companies are private, often loss-making, and illiquid. Tax reliefs cushion the downside but do not guarantee a positive outcome. Relief is also withdrawn if you sell within three years, receive value from the company, or if the company loses qualifying status within the holding period.

As with all high-risk investments, diversification across multiple EIS companies through a managed EIS fund or portfolio service is generally advisable.

Summary

EIS remains one of the most tax-efficient ways for UK investors to back growing businesses in 2026/27. The combination of 30% income tax relief, CGT exemption on growth, unlimited CGT deferral, and loss relief creates a compelling risk-adjusted return profile for higher-rate taxpayers. Ensure any company holds HMRC advance assurance and seek regulated financial advice before committing capital.