The Enterprise Investment Scheme (EIS)
The Enterprise Investment Scheme (EIS) is a UK Government initiative that provides a range of tax reliefs for investors who subscribe for qualifying shares in eligible companies.
Since its inception, the EIS has facilitated over £32 billion of investment into more than 56,000 UK startups, making it the leading program of its kind globally. The scheme plays a fundamental role in driving innovation, creating jobs, and fueling economic growth across the UK. By attracting talent and ensuring startups have access to vital funding, the EIS has become a cornerstone of the UK’s entrepreneurial ecosystem.
The tax benefits of EIS depend on the individual circumstances of each investor and maybe subject to change in the future.
Investors can claim up to 30% income tax relief on the value of their investment.
The maximum investment that investors can claim relief on in a single tax year is £1 million, which amounts to £300,000 of income tax relief.
Investors can get relief in the tax year money is invested into a company or they can carry it back 1 tax year.
Investors in Haatch EIS funds can choose to treat some or all of the underlying company investments as if they were made in the previous tax year. This means that up to £2 million can be invested in a tax year if investors have sufficient liabilities & allowances over 2 tax years.
When investors sell EIS shares, any growth in value from an investment is 100% capital gains tax-free.
To qualify for this relief, income tax relief must have already been claimed.
Investors have to hold the shares for at least three years, and the company must remain EIS-qualifying for at least three years.
A gain made on the sale of other assets can be reinvested in EIS shares and deferred over the life of the investment. There’s no upper limit on the value of gains that can be deferred.
It’s important to note that it’s the gain, not the proceeds of the sale that should be reinvested. For example, if an asset was sold for £50,000 and cost £10,000, this would result in a gain of £40,000. This £40,000 would need to be reinvested in EIS-qualifying shares in order to defer the gain.
To qualify for deferral relief, the reinvestment into EIS-qualifying shares needs to be made no earlier than 12 months prior to, or three years after, the original gain was made.
If shares in underlying portfolio companies are disposed of at a loss, investors can elect that the loss be set against any income tax of that year or carried back to the previous tax year.
EIS shares qualify for 100% Inheritance Tax (IHT) relief via Business Property Relief (BPR) on the first £1 million of combined business and agricultural assets, provided they are held for at least two years and are still owned at the time of the investor’s death. Any value above £1 million will qualify for 50% IHT relief. These changes will come into effect on April 6th 2026.