Enterprise Investment Scheme Octopus launched its first EIS investment in 2004, giving investors the opportunity to invest in early stage companies and claim a number of tax reliefs.

Octopus has raised and invested more than £800 million in EIS-qualifying companies since 2004, through two products:

  • Octopus EIS: invests in smaller, unquoted UK companies and targets capital preservation.
  • Octopus Eureka EIS: invests in early-stage unquoted or AIM-listed UK companies with the potential for significant capital growth.

Both Octopus EIS and Octopus Eureka EIS are currently closed for new investment.

You can still access the details of EIS investments your clients already hold with us. Just call 0800 316 2067, email salessupport@octopusinvestments.com or visit our secure portal.

Benefits of investing in an EIS
  • Access to investments in early-stage companies.
  • Up to 30% income tax relief, provided the investment is held for a minimum of three years.
  • Potential for 100% relief on inheritance tax (available after holding the investment for two years and provided shares are still held at time of death).
  • Opportunity to defer a capital gain and eliminate it entirely if EIS shares are held at death.
What are the risks?

Investment values can fluctuate
An EIS invests in smaller companies which are considered high risk because they have a higher failure rate than more established businesses. The value of an EIS investment can fall as well as rise, and investors might not get back as much as they originally invested.

Smaller company shares can be more volatile
The shares of EIS-funded companies can also change value more quickly and more significantly than the shares of larger companies, such as those listed on the main market of the London Stock Exchange.

An EIS is a long-term investment
If the investor sells their EIS shares before the three-year minimum holding period ends, they will have to repay any income tax relief claimed. Investors should think of an EIS as a long-term investment.

Past performance is no guide to the future
The past performance of an investment is not a reliable indicator of future results. Nor should investors rely on any forecasts made about future returns.

EIS shares may be difficult to sell
It may be difficult for an EIS investor, or EIS fund manager, to find a buyer for the shares, so it may take time to sell the shares and pay back the proceeds to investors. The companies that an EIS invests in are often unlisted so investors may have to wait until the company is sold or has large enough cash reserves to buy back its shares from investors.

Tax rules can change
Rates of tax, tax benefits and tax allowances depend on an investor’s personal circumstances and may change over time. There is no guarantee that companies will always be EIS-qualifying. If a company no longer qualifies for an EIS, investors may have to repay any tax relief already claimed. It’s also worth remembering that HMRC may change the rules on EIS tax relief in the future.

Related Documents

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Octopus EIS terms and conditions

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Octopus EIS guide to claiming tax relief

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Octopus EIS guide to loss relief

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Important information

As a reminder, our products place your clients’ capital at risk, so they could get back less than their original investment. Tax treatment depends on your clients’ personal circumstances and can change. Tax reliefs depend on the portfolio companies maintaining their qualifying status. Full details on all of the risks associated with these products are set out in the relevant product brochure.

Nothing on this page constitutes investment, tax or legal advice. Estate planning investments may not be suitable for everyone so we recommend investors speak to a financial adviser. Any recommendation should be based on a holistic review of your client’s financial situation, objectives and needs.