What is the Enterprise investment scheme (EIS)?
The case for early investment
One of the best ways to significantly increase personal wealth is to make an early investment into shares of a small business that goes on to achieve big growth. The earlier you invest, the more value can flow to you as a shareholder. However, you should keep in mind that the value of an investment may go down as well as up and investors may not get back what they originally put in.
Launched in 1994, the Enterprise Investment Scheme (EIS) makes investing in shares in early-stage businesses even more attractive. When an early-stage business is EIS-qualifying, you can claim a number of tax reliefs alongside your investment, including upfront income tax relief, tax-free capital gains, and loss relief on each investment that returns less than you put in. Please remember tax rules may change in the future, and the value of tax reliefs depends on your individual circumstances.
Why EIS exists
The government offers EIS tax reliefs to encourage people to invest in early-stage businesses with high growth potential. They do this because smaller businesses that mature into successful, established companies create jobs and stimulate economic growth in the UK.
Since EIS was launched, more than 31,000 qualifying early-stage businesses have benefitted from £22 billion of investment (National statistics published by HMRC 29 May, 2020). In 2018-19 alone, £1.8 billion was raised by companies that qualify for EIS.
By making an EIS-qualifying investment, you have the potential to grow your own wealth – and to support future UK economic growth too.