Enterprise Investment (EIS)

An Enterprise Investment Scheme (EIS) is a government initiative that provides a valuable source of funding to early-stage companies while offering tax benefits to investors. The legislation surrounding EIS has been about since the 1990s and aims to help small and medium sized businesses grow into successful companies though external funding.

EIS investments are very high risk due to the nature of the underlying companies which are small and in the early stages of their development. Yet an EIS investment can be useful for individual investors when used in the right situation as part of a holistic financial plan. Professional financial advice should always be sought before entering into such arrangements.

For investors, Enterprise Investment Schemes offer:

• Potential for capital growth;
• Supporting innovative companies and wider UK economic growth;
• Income tax relief based on the sum invested (maximums apply);
• Tax free growth;
• Capital Gains Tax deferral (over the life of the EIS investment);
• Inheritance Tax relief (if held at death).

You should not invest in an EIS purely due to its tax treatment. Tax reliefs depend on the EIS maintaining its qualifying status, and the tax benefits available to you will depend on your own personal circumstances and can change. The value of an EIS investment can fall as well as rise. You may not get back the full amount you invest and shares may be difficult to sell. Minimum holding periods apply.