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The Enterprise Investment Scheme (EIS) is a scheme designed to help grow your business by raising money. It does this by offering tax reliefs to individual investors who buy new shares in your company. Under EIS, you can raise up to £5 million each year, and a maximum of £12 million in your company’s lifetime. This also includes amounts received from other venture capital schemes.
If your company carries out a significant amount of research, development or innovation, these are known as knowledge intensive companies, and different rules will apply.
Your company can use the scheme if it:
The money raised by the new share issue must be used for a qualifying business activity, which is either:
The money raised by the new share issue must:
*Most trades will qualify. Click here for excluded trades.
The shares that are issued must be paid up in full, in cash, when they’re issued and be full risk ordinary shares which are not redeemable and do not carry special rights to your assets.
The shares can have limited preferential rights to dividends but this right to receive cannot be allowed to accumulate or to be varied.
When the shares have been issued, you must complete a compliance statement (EIS1) and send it to HMRC.
The compliance statement can be submitted:
For each share issue, you must complete a separate application. Additionally, the company must obtain advanced assurance from HMRC (if they haven’t received it already).
If your application is successful HMRC will send you a letter and compliance certificates (form EIS3) to give to your investors so they are able to claim their tax relief.