Short answer
The EIS investment process runs from due diligence and subscription, through the share issue and the company's EIS1 compliance statement, to receiving your EIS3 certificate and claiming relief. You then hold the shares for at least three years, and possibly much longer, until an exit.
EIS process timeline
| Stage | Who | Typical timing |
|---|---|---|
| Advance assurance (optional) | Company and HMRC | Before fundraising |
| Due diligence and documents | Investor | Before investing |
| Subscription and payment | Investor | Investment date |
| Share issue | Company | On completion of the round |
| Four months' trading | Company | After the share issue |
| EIS1 compliance statement | Company to HMRC | After four months' trading; within 2 years of the end of the tax year of issue |
| EIS3 certificate | Company to investor | After HMRC authorises the EIS1 |
| Claim relief | Investor | Within 5 years of 31 January after the tax year of issue |
| Minimum holding period | Investor | At least 3 years from the share issue |
| Exit | Company / shareholders | Uncertain; often 5–10 years or more |
Before investing
Review the company's business plan, financials, team, valuation and use of funds. Check its EIS position and understand the share rights. Firms promoting the investment must normally categorise you and check the investment is appropriate.
Subscription and share issue
You sign a subscription or application form and pay in cash. Shares must be issued and fully paid; the issue date is the date that matters for relief and for the three-year period.
Compliance: EIS1 and EIS3
The company submits form EIS1 once it has traded for four months. HMRC reviews it and, if satisfied, provides a unique investment reference. The company then issues an EIS3 to each investor.
Claiming and keeping relief
You claim relief using the EIS3. During the holding period, avoid anything that could withdraw relief, such as receiving value from the company or becoming connected with it, and tell HMRC within 60 days if a disqualifying event occurs.
Exit
Possible exits include a trade sale, a listing, a secondary sale or a share buy-back. Many companies never achieve an exit and some fail. If a company fails, you may be able to claim loss relief.
Understand EIS loss relief.
Frequently asked questions
What happens if I never receive an EIS3?+
Without an EIS3 you cannot claim relief. Contact the company; if it cannot issue one, its shares may not qualify.
Can I sell EIS shares after three years?+
You can if a buyer exists, but there is usually no market for unquoted shares, so selling may be difficult or impossible.
Sources
- GOV.UK — Venture capital schemes: apply for the Enterprise Investment Scheme
- GOV.UK — Venture capital schemes: tax relief for investors
- GOV.UK — Enterprise Investment Scheme: income tax relief (HS341)
Tax rules can change. The information on this website is general information only and is not personal financial, investment, tax or legal advice. It does not take account of your individual circumstances. See our editorial policy.
Interested in EIS investing?
If you are a high-net-worth, sophisticated or professional investor, you can request investor information from us.
Capital at risk. EIS investments are high risk and illiquid. Tax reliefs depend on individual circumstances and qualifying conditions.