Short answer
'EIS schemes' usually refers to the different structures for investing under the Enterprise Investment Scheme: direct investment in a single company, discretionary EIS portfolio services, HMRC-approved EIS funds and crowdfunding platforms. The tax reliefs are the same, but timing of relief, diversification, fees and control differ.
One scheme, several structures
There is only one Enterprise Investment Scheme, set out in tax legislation. Providers offer different structures for accessing it. In every case, relief is ultimately given on shares in individual qualifying companies.
Comparing EIS structures
| Structure | How it works | When relief is dated | Typical considerations |
|---|---|---|---|
| Single-company investment | You subscribe directly for shares in one company | Date of share issue | Full control; high concentration risk |
| EIS portfolio service (unapproved fund) | A manager invests your money across several companies, held via a nominee | Each company's share issue date | Diversification; relief arrives in stages; management fees |
| HMRC-approved EIS fund | A fund approved by HMRC that invests mostly in knowledge-intensive companies | Can be the date the fund closes | Relief timing more predictable; specific approval conditions |
| Crowdfunding / platforms | Investment through an online platform, often in single companies | Date of share issue | Low minimums; check platform authorisation and nominee arrangements |
Approved knowledge-intensive funds
Since April 2020, HMRC-approved EIS funds must invest mainly in knowledge-intensive companies. A key feature is that investors can claim income tax relief for the tax year in which the fund closes, and carry it back, even if the fund invests later.
Questions to ask any EIS provider
- Is the firm authorised by the FCA, and in what capacity?
- What are the initial, annual, performance and exit fees, and who pays them?
- How long will it take to deploy the money and issue EIS3 certificates?
- How are companies selected, and what conflicts of interest exist?
- What is the expected holding period and exit approach?
Beware 'low-risk' EIS
The risk-to-capital condition means genuine EIS investments must carry a significant risk of capital loss. Be cautious of any product described as capital-protected or low risk.
Frequently asked questions
Is an EIS fund safer than a single company?+
Spreading investment across several companies reduces concentration risk but does not make EIS low risk. Funds can still lose most or all of their value.
Do EIS funds pay fees out of my relief?+
Fee structures vary. Some fees are paid by investee companies rather than investors. Ask the provider for full details.
Sources
- GOV.UK — Venture capital schemes: tax relief for investors
- GOV.UK — Venture capital schemes: apply for the Enterprise Investment Scheme
- FCA — High-risk investments and financial promotions
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.