EIS relief calculator
Investors can claim a number of valuable tax reliefs when they invest in Enterprise Investment Scheme (EIS) qualifying companies. This calculator illustrates how these reliefs work in practice.
How it works
Fill in the boxes below to show how much tax relief could be claimed on an Enterprise Investment Scheme (EIS) investment in a single company based on an individual’s personal tax circumstances. We’ve provided a reminder of the tax reliefs below. If you have an anticipated growth rate for the investment, you can also estimate how much it could grow over its lifetime.
The calculation compares an EIS investment to a non-EIS investment for illustration purposes. These investments are likely to have different outcomes and risk profiles.
This calculator does not take into account fees and charges. It’s worth bearing in mind that typical charges for EIS investments include initial fees, ongoing fees, annual management charges, dealing fees for the purchase and sale of shares and adviser charges. In some cases they can also include a performance fee.
If you invested in an EIS portfolio, your investment would be spread across a number of companies. You would typically expect to have some companies drop in value, potentially to zero, and some increase in value. One of the main benefits of an EIS portfolio is that any growth in value is free from capital gains tax. And loss relief on a company by company basis, is available against income tax and/or capital gains tax even if the portfolio has grown overall in value. As this calculator only shows the impact of tax reliefs on an individual company basis you won’t be able to show this portfolio effect.
We offer investors an EIS qualifying portfolio through our Octopus Ventures EIS products. If you’d like to create an illustration of this investment for a client, please use our product illustration tool
A reminder of the EIS tax reliefs
Income tax relief
Investors can claim up to 30% income tax relief on EIS investments up £1 million per tax year (provided the shares are held for at least 3 years). This means you can claim up to £300,000 in income tax relief per year. It is possible to claim income tax relief in respect of more than £1 million of EIS investments in a tax year by investing amounts in excess of £1 million in Knowledge Intensive Companies (KICs) to a maximum of an incremental £1 million.
When EIS-qualifying shares are sold, any growth in the value from an investment is 100% free from capital gains tax (provided the shares are held for at least 3 years). Income tax relief must also have already been claimed, and not withdrawn by HMRC.
Capital gains deferral
A gain made on the sale of other assets can be reinvested in EIS-qualifying shares and deferred over the life of the investment. There’s no upper limit on the value of gains that can be deferred.
Inheritance tax relief via Business Property Relief
EIS-qualifying shares can also qualify for Business Property Relief (BPR). This means they can be left to beneficiaries free from inheritance tax, provided they have been held for at least two years and at the time of death.
If EIS shares are sold for less than the amount invested (net of income tax relief), loss relief is available. It allows an investor to offset the loss against either their capital gains or income.
A guide to EIS
More information on these tax reliefs can be found in our EIS guide.
Things to bear in mind
EIS tax reliefs can be complicated and this calculator is intended to help you understand how they work. It’s been prepared in good faith and is based on our understanding and interpretation of current law.
Keep in mind that specific circumstances that are outside the scope of this calculator may result in different levels of tax relief being available.
Contact our team
Need support from an Octopus business development manager?
Call us at 0800 316 2067