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Tax incentive
Tax incentiveGrowthHMRC

Enterprise Investment Scheme (EIS)

EIS is the UK's flagship growth-equity tax incentive: companies under 7 years of trading (or knowledge-intensive companies under 10) can raise up to £5m a year and £12m lifetime from individual investors, who receive 30% income tax relief plus CGT and loss-relief benefits.

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Quick answer

EIS is the default UK equity tax-relief scheme for post-SEIS companies raising £500k–£5m a year from angels, EIS funds and high-net-worth investors before they are institutional-VC-ready. Investors receive 30% income-tax relief and CGT exemption on qualifying shares held for three years. Companies must be under seven years old (with exceptions) and meet trading, asset and employee tests. Most growth-stage UK founders run an EIS round before a priced VC Series A.

Funding amount

Up to £12m raised

Region

United Kingdom

Stage

Growth

Provider

HMRC

Advisor view

Position EIS as a continuation of SEIS, not a separate event. Investors who backed SEIS typically expect to convert pro-rata into EIS; protect their allocation in the round structure.

Frequently asked questions

What is the Enterprise Investment Scheme (EIS)?
EIS is the UK's flagship growth-equity tax incentive. Companies under 7 years of first commercial sale (10 for knowledge-intensive companies) can raise up to £5m a year and £12m lifetime from individual investors, who receive 30% income-tax relief plus CGT and loss-relief benefits on qualifying shares held three years.
Who is EIS for?
UK trading companies under 7 years of first commercial sale, under 250 employees and under £15m gross assets, raising growth equity from individuals or EIS funds — most typically a 2–6-year-old SaaS, deep-tech or life-sciences company raising £1m–£3m post-SEIS.
Who is EIS not for?
Companies that have already taken material institutional VC, subsidiaries of larger groups, asset-backed businesses (property, finance, leasing), or anyone raising primarily from corporate investors.
Does the company receive the EIS tax relief?
No. EIS is an investor-side relief — investors receive 30% income-tax relief plus CGT exemption on qualifying shares. The company itself does not receive a tax credit.
What is Advance Assurance and do we need it?
Advance Assurance is HMRC's pre-issue confirmation that the company and proposed share issue meet the scheme rules. It is not strictly mandatory but it is the safest path — typical turnaround is 4–10 weeks.
When can we file the EIS1 compliance statement?
EIS1 can be filed after the company has been trading for 4 months or has spent 70% of the capital raised on qualifying activities, whichever comes first. HMRC then issues EIS2 and EIS3 certificates for investors.
What are the most common reasons EIS applications fail?
Breaching the 7-year first-commercial-sale rule, exceeding the £12m lifetime risk-finance limit, prior non-qualifying investment, group restructuring that disqualifies the company, or investors who are connected employees or directors.
What happens after EIS?
Most companies move to institutional VC, growth equity, or British Patient Capital-backed funds. Knowledge-intensive companies may run a second EIS round under the extended 10-year window.
How does EIS interact with SEIS?
EIS is the natural continuation of SEIS, not a separate event. SEIS investors typically expect to convert pro-rata into EIS — protect their allocation in the round structure.
Where can I read the official scheme rules?
The official guidance is published on gov.uk under 'Venture capital schemes — apply for the Enterprise Investment Scheme'. Always confirm current thresholds with a specialist accountant before issuing shares.

Who it's for

UK trading companies under 7 years of first commercial sale (10 for knowledge-intensive companies), under 250 employees and under £15m gross assets, raising growth equity from individuals or EIS funds.

Probably not for you if…

Companies that have already taken material institutional VC, subsidiaries of larger groups, asset-backed businesses (property, finance, leasing), or anyone raising primarily from corporate investors.

Usually too early when

Advisor signal

You have not yet incorporated, you have no revenue or product, or you have less than ~£100k of investor interest soft-circled — EIS rounds are typically £500k+ and need anchor investors.

Eligibility

UK trading company; <7 years of first commercial sale (10 for KIC); <250 FTE; <£15m gross assets pre-raise; £5m annual / £12m lifetime cap on risk-finance investment; qualifying trade.

Evidence you'll need

Articles, cap table, share-issue board minutes, business plan, Advance Assurance pack, EIS1 compliance statement post-issue, KIC declaration if relying on the 10-year window.

Application timeline

Advance Assurance 4–10 weeks; EIS1 can be filed after 4 months of trading or 70% spend; EIS3 certificates to investors typically within 6 weeks of HMRC approval.

Common reasons applications fail

Breaching the 7-year first-commercial-sale rule, exceeding the £12m lifetime risk-finance limit, prior non-qualifying investment, group restructuring that disqualifies the company, or investors who are connected employees/directors.

What improves your odds

Clear KIC status if past 7 years, prior SEIS investors converting to EIS, named EIS fund lead, clean cap table, and a credible 18–24-month plan showing how the round is deployed.

Typical successful applicant

A 2–6-year-old UK SaaS, deep-tech or life-sciences company raising £1m–£3m from a mix of EIS funds and angels, post-SEIS, with early revenue or strong technical proof.

Common misconceptions

EIS does not give the company a tax credit — investors get the relief. EIS does not protect against VC dilution; it is a wrapper, not capital.

What happens next

After Advance Assurance, close the round, issue shares, wait for 4-month/70% trigger, file EIS1, HMRC issues EIS2/EIS3 certificates for investors to claim 30% income tax relief.

What comes next

After EIS, most companies move to institutional VC, growth equity, or British Patient Capital-backed funds. Knowledge-intensive companies may run a second EIS round under the extended 10-year window.

Funding context

EIS sits between SEIS and institutional VC on the equity ladder. It is frequently paired with Innovate UK Smart Grants or Innovation Loans for non-dilutive R&D capital.

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