How EIS investments work
Companies that meet the scheme's conditions issue new shares to investors. Once the company has traded for at least four months, it can apply to HMRC to issue compliance certificates, which investors use to claim relief. Investors must generally hold the shares for at least three years. For a step-by-step explanation see what EIS is and how it works.
Ways to make an EIS investment
| Route | What it involves | Considerations |
|---|---|---|
| Direct investment | Subscribing for shares in one company | Concentrated risk; you review the company yourself |
| EIS fund / portfolio service | A manager invests across several companies | Fees; spread of risk; less choice over holdings |
| Platform or adviser | An intermediary arranges the investment | Check the firm's regulatory status and charges |
The tax reliefs in context
Qualifying investors may receive 30% income tax relief, capital gains tax exemption on qualifying shares, CGT deferral and loss relief. These reliefs are explained in our guide to EIS tax relief. They change the after-tax cost of an investment, not the likelihood of the company succeeding.
Evaluating an EIS opportunity
- Is the company's EIS position confirmed, under advance assurance, or still being sought?
- What will the money be used for, and what milestones should it reach?
- Who runs the company, and what is their track record?
- What rights do the shares carry, and how might future rounds dilute them?
- What realistic exit routes exist, and over what timeframe?
Review our eligibility conditions and risk guide before considering any EIS investment.