Glossary · UK
What is Enterprise Investment Scheme (EIS)?
A tax relief scheme that gives investors 30% Income Tax relief and CGT deferral in exchange for investing in small UK companies.
Full Definition
The Enterprise Investment Scheme (EIS) is a UK government scheme designed to help small, higher-risk companies raise finance by offering investors a generous package of tax reliefs. Investors can claim 30% Income Tax relief on investments up to £1,000,000 per tax year (up to £2,000,000 if at least £1,000,000 is invested in Knowledge Intensive Companies). The relief is claimed against the investor's Income Tax bill for the year of investment, or carried back one year. Shares must be held for at least three years to keep the IT relief and qualify for CGT disposal relief — meaning any gain on the shares is entirely free of Capital Gains Tax after three years. If a gain on another asset is reinvested into EIS shares, CGT is deferred until those shares are sold or the company loses EIS qualifying status. EIS shares also qualify for Business Property Relief (BPR) after just two years, removing them from the investor's estate for Inheritance Tax purposes. If shares are sold at a loss, loss relief allows the loss (net of IT relief) to be set against Income Tax rather than just CGT. The Seed Enterprise Investment Scheme (SEIS) is a sister scheme for even earlier-stage companies, offering 50% IT relief on investments up to £200,000 per year but with tighter qualifying conditions. EIS companies must be unquoted, UK-resident trading companies below certain size thresholds.