Enterprise investment scheme tax relief

Produced by a Tolley Corporation Tax expert

Corporation Tax

Guidance

Overview of EIS tax reliefs

The enterprise investment scheme (EIS) offers significant tax reliefs to encourage individuals to invest money in qualifying shares issued by qualifying unquoted companies. The scheme is designed to encourage investment in small, young companies that need investment to grow but have limited access to market finance, often because they are perceived as high-risk. EIS offers income tax reliefs and capital gains tax (CGT) reliefs to individual investors who subscribe to new shares in such companies.

A subscription for eligible shares of a qualifying EIS company is therefore a tax efficient investment for the individual. The investor can benefit from the following tax reliefs:

•
EIS income tax relief
•
CGT exemption
•
loss relief against CGT or income tax
•
CGT deferral relief

These reliefs are considered in further detail below.

Business property relief (BPR) may also be available if the shares are held for the qualifying period for BPR. See the BPR overview guidance note.

The conditions for a valid investment are discussed in the Conditions

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