The Enterprise Investment Scheme — EIS — is one of the most generous investment tax programmes the UK government has ever created. Thirty per cent income tax relief. Zero capital gains tax on profits. A mechanism to defer CGT from other disposals. Loss relief that caps your downside. Inheritance tax exemption after two years.
EIS investment UK has been running since 1994. In the 2024/25 tax year, 3,735 companies raised £1.575 billion through the EIS scheme UK. It is not a niche product for specialists. It is a mainstream part of how serious UK investors structure their portfolios.
Is EIS a good investment? That depends entirely on your tax position, risk appetite, and investment horizon. This guide explains exactly how EIS works so you can make that judgement.
EIS at a glance — 2026
| Income tax relief | 30% of amount invested |
|---|---|
| Annual investment limit | £1,000,000 |
| Knowledge-intensive company limit | £2,000,000 |
| CGT on gains after 3 years | 0% |
| CGT deferral | Full deferral, no cap on gain size |
| IHT Business Relief | 100% after 2 years |
| Scheme extended until | April 2035 |
What is EIS and how does EIS work?
EIS UK stands for Enterprise Investment Scheme. Administered by HMRC, the EIS scheme provides a package of tax reliefs to individuals who invest in qualifying unlisted UK companies. EIS explained simply: the government uses tax incentives to channel private capital into early-stage British businesses that struggle to access conventional financing.
The logic is straightforward. Early-stage companies are risky. Most fail. Without an incentive, rational investors would put money into listed stocks, property, or cash. EIS tips the balance — not by removing the risk, but by making the risk-reward profile significantly more attractive.
EIS UK sits alongside SEIS (Seed Enterprise Investment Scheme) as the two main tax-advantaged venture investment schemes. SEIS targets the very earliest stage — pre-revenue seed companies. EIS covers a wider range of companies that have progressed beyond seed stage but remain growing, private, and carry the risk of losing capital. Many companies raise SEIS first then follow with an EIS round as they mature.
The EIS tax relief package
EIS income tax relief — 30%
EIS 30% tax relief is the headline benefit. Invest £100,000 in a qualifying EIS company and reduce your income tax bill by £30,000. Invest £1 million and save £300,000. The EIS income tax relief is claimed through Self Assessment — applied to the year of investment or carried back to the prior year using EIS carry back. You cannot claim more EIS income tax relief than your total income tax liability for the year.
EIS capital gains tax relief — the exemption
Hold EIS shares for at least three years and any gain is completely free of CGT. EIS capital gains tax relief means that for a higher-rate taxpayer, the 24% CGT that would normally apply on investment gains does not apply to EIS exits. On a successful investment that doubles or triples in value, this is a substantial additional return on top of the 30% EIS tax relief already received.
EIS CGT deferral
EIS CGT deferral is one of the most powerful and least-understood EIS tax benefits. If you have a capital gain from any source — a property sale, a business exit, a portfolio disposal — you can invest that gain into EIS and defer the CGT indefinitely.
The investment must be made within one year before or three years after the gain arises. There is no cap on the size of gain you can defer through EIS CGT deferral. A landlord selling a buy-to-let with a £500,000 gain can defer the entire CGT bill. The deferred gain becomes chargeable when the EIS shares are eventually sold.
EIS loss relief
EIS companies fail. That is the nature of early-stage investing. If an EIS company fails, you claim loss relief on the net loss — the original investment minus the 30% income tax relief already received. For a 45% taxpayer: invest £100,000, receive £30,000 relief upfront. Net loss on failure: £70,000. Loss relief at 45%: £31,500. Total tax recovered: £61,500. Maximum effective loss: £38,500 — or 38.5p in the pound. See our full guide to EIS loss relief with worked examples.
EIS inheritance tax relief
Hold EIS shares for two years and they qualify for Business Property Relief at 100%, removing them entirely from your estate for IHT. EIS inheritance tax relief at 100% means that with IHT at 40%, this is a substantial long-term benefit for investors who hold beyond the two-year mark.
These five reliefs together make EIS a tax efficient investment unlike any other mainstream vehicle available in the UK. No other EIS tax efficient investment wrapper combines all five simultaneously. No other investment combines income tax relief, CGT exemption, CGT deferral, loss relief, and IHT relief simultaneously.
EIS eligibility — who can invest
To claim EIS tax benefits you must be a UK taxpayer. The main EIS eligibility conditions:
- No connection to the company — you cannot hold more than 30% of shares or be a paid employee at the time of investment
- Minimum holding period — three years to retain the income tax relief and CGT exemption
- Qualifying shares only — new ordinary shares
- Own money — not through a pension or ISA
To access most EIS investment opportunities, investors must self-certify as either a High Net Worth Individual (annual income of £100,000 or more, or net assets of £250,000 or more) or a Sophisticated Investor under the Financial Promotion Order 2005.
EIS qualifying companies — HMRC rules
Not every private company qualifies. EIS HMRC criteria at the time of investment:
- Fewer than 250 employees (500 for knowledge-intensive companies)
- Gross assets under £15 million before the investment
- First commercial sale within the last 7 years (10 for knowledge-intensive companies)
- No more than £12 million raised through EIS lifetime (£20 million for knowledge-intensive companies)
- A qualifying trade — financial services, property development, and energy generation are among the excluded sectors
- UK-based trading company, unlisted
These are the EIS rules on company eligibility. EIS approved companies are those that have received Advance Assurance from HMRC — pre-clearance that the investment will qualify before investors commit. EIS eligible companies that have not obtained Advance Assurance are a higher documentation risk for investors. Most serious EIS investment opportunities come with Advance Assurance in place.
EIS advance assurance is applied for by the company before fundraising. It is not a guarantee — HMRC can still reject relief if conditions are not met at the time of investment — but it is the standard practice across the EIS ecosystem.
EIS investment limits — 2026
- £1 million per investor per tax year — standard EIS investment UK limit
- £2 million per tax year — where the additional £1 million is in knowledge-intensive companies
EIS vs SEIS
SEIS (the Seed Enterprise Investment Scheme) works on the same principles as EIS — the same style of reliefs, three-year hold, CGT-free growth and loss relief — but for the earliest-stage companies, with income tax relief of 50% rather than 30%. Lower limits apply (£200,000 vs £1 million) and it targets pre-revenue companies under 25 employees and under 3 years old. Many investors use SEIS and EIS together; companies often raise SEIS first, then an EIS round as they grow.