EIS relief

EIS relief

The Enterprise Investment Scheme (EIS) offers substantial tax incentives to individual investors in smaller, higher-risk companies. This overview summarises the tax reliefs that are available and explains when EIS applies, ie what EIS conditions have to be met by the company, the investors, the shares, the use of funds and the arrangements as a whole in order for EIS reliefs to be available.

EIS tax reliefs

In summary, tax reliefs under EIS are as follows:

•
income tax relief at 30% of the amount invested up to £1m (or up to £2m provided at least £1m is invested in shares in knowledge intensive companies) (subject to clawback if the shares are disposed of within three years)
•
capital gains tax (CGT) exemption on any capital gain realised on a disposal of shares that qualified for EIS relief and were held for three years
•
CGT deferral relief allowing an investor to defer capital gains realised on disposal of assets to the extent that gains are reinvested in shares qualifying for EIS relief, with the option of an associated deferral of business asset disposal relief (formerly entrepreneurs' relief)
•
capital losses

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