Short answer
The Enterprise Investment Scheme (EIS) is a UK government scheme, run by HMRC, that gives individuals tax reliefs when they buy new shares in qualifying unquoted trading companies. Reliefs include 30% income tax relief, capital gains tax exemption and deferral, and loss relief — all subject to strict conditions and a minimum three-year holding period.
What is the Enterprise Investment Scheme?
The Enterprise Investment Scheme was introduced in 1994 to help smaller, higher-risk trading companies raise equity finance. It does this by offering tax reliefs to individual investors who subscribe for new ordinary shares in those companies. It is one of four UK venture capital schemes, alongside the Seed Enterprise Investment Scheme (SEIS), Venture Capital Trusts (VCTs) and the now-closed Social Investment Tax Relief.
EIS tax reliefs for investors
| Relief | What it does | Key condition |
|---|---|---|
| Income tax relief | Reduces your income tax bill by 30% of the amount invested | Shares held for at least 3 years; up to £1m a year (£2m if the excess is in knowledge-intensive companies) |
| CGT exemption | Gains on disposal of EIS shares can be free of capital gains tax | Income tax relief claimed and not withdrawn; shares held 3 years |
| CGT deferral relief | Defers a gain on another asset by reinvesting it in EIS shares | Investment made 1 year before to 3 years after the gain |
| Loss relief | A loss on EIS shares (net of income tax relief) can be set against income or gains | Shares disposed of at a loss |
Read more about EIS income tax relief.
Which companies qualify for EIS?
The company issuing the shares must be unquoted when the shares are issued, have a permanent establishment in the UK, carry on a qualifying trade, and meet size, age and funding limits. Since 15 March 2018 every investment must also satisfy the 'risk-to-capital' condition: the company must intend to grow its trade over the long term, and the investment must carry a significant risk of loss of capital.
| Company test (shares issued on or after 6 April 2026) | Most companies | Knowledge-intensive companies |
|---|---|---|
| Gross assets | No more than £30m before and £35m after the share issue | Same |
| Employees (full-time equivalent) | Fewer than 250 | Fewer than 500 |
| Risk finance raised in any 12 months | £10m | £20m |
| Lifetime risk finance limit | £24m | £40m |
| Age (from first commercial sale) | Generally within 7 years | Generally within 10 years |
Limits increased from 6 April 2026 under Finance Act 2026. Earlier limits (£15m/£16m gross assets, £5m annual and £12m lifetime; £10m and £20m for knowledge-intensive companies) still apply to 'specified companies' as defined by HMRC and to earlier share issues.
Certain activities are excluded, including dealing in land, financial activities, property development, legal and accountancy services, operating hotels or nursing homes, farming and forestry, and most energy generation.
Who can invest?
Relief is available to individuals who are not 'connected' with the company. Broadly, that means you, together with your associates, must not hold more than 30% of the company, and you must not be a paid employee or director at the time of the share issue (subject to limited exceptions for business angels). You need a UK income tax liability to use income tax relief.
How EIS relief is claimed
- You subscribe for new shares, paid in full in cash at issue.
- After the company has traded for four months, it submits a compliance statement (form EIS1) to HMRC.
- HMRC authorises the company to issue compliance certificates (form EIS3) to investors.
- You claim relief on your Self Assessment tax return, or by sending the claim section of the EIS3 to HMRC.
The minimum holding period
Shares must normally be held for at least three years from the date of issue (or from the start of trading, if later). If you sell within that period, receive value from the company or the company stops qualifying, income tax relief can be withdrawn and the CGT exemption lost.
Risks you should understand
EIS companies are small, early-stage and unquoted. Many fail, and shares are usually illiquid. Tax relief reduces the net cost of an investment but does not reduce the risk of losing it.
Before investing, read the main risks of EIS investing.
Frequently asked questions
Is the Enterprise Investment Scheme still running?+
Yes. The government has legislated to extend EIS beyond its previous sunset date of April 2025, and Finance Act 2026 increased the company investment limits from 6 April 2026.
How much can I invest under EIS?+
Up to £1 million per tax year, or £2 million where anything above £1 million is invested in knowledge-intensive companies. There is no minimum set by HMRC; individual companies set their own minimums.
Is EIS the same as an ISA?+
No. An ISA is a tax wrapper for many asset types. EIS gives reliefs only on new shares in qualifying high-risk unquoted companies.
Sources
- GOV.UK — Venture capital schemes: tax relief for investors
- GOV.UK — Venture capital schemes: apply for the Enterprise Investment Scheme
- HMRC VCM1010 — Latest updates to the venture capital schemes
- GOV.UK — EIS and VCT investment limit increase and restructure (from 6 April 2026)
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.