What is EIS? Everything Investors Need to Know (2026)

The Enterprise Investment Scheme — EIS — is a UK government programme that provides substantial tax incentives to investors who back growing British companies. Since its launch in 1994, EIS has channelled billions of pounds into UK businesses and helped fund some of the country's most successful companies at early stages of their growth. Revolut, Zoopla, and Deliveroo all received EIS investment.

This guide explains how EIS works, who can invest, what the tax reliefs are worth, what the risks are, and how to get started.

What is EIS?

EIS stands for Enterprise Investment Scheme. It is a HMRC-administered programme that incentivises private investment into unlisted UK companies by offering a package of tax reliefs to investors. Companies must meet qualifying criteria — primarily around their size, age, and the nature of their trade — to offer EIS to their investors.

EIS sits alongside its smaller sibling SEIS (Seed Enterprise Investment Scheme) as the two main tax-advantaged venture investment schemes in the UK. Where SEIS targets the very earliest stage — pre-revenue startups — EIS is for companies that have progressed beyond the seed stage but are still growing and privately held. Many companies raise SEIS first, then follow with EIS rounds as they mature.

The EIS tax reliefs

30% income tax relief

Invest £100,000 in a qualifying EIS company and you can reduce your income tax bill by £30,000. The relief is claimed on your Self Assessment return and can be used in the tax year of investment or carried back to the prior year. You must have sufficient income tax liability to claim against — you cannot claim more relief than your total income tax bill.

Capital gains tax exemption

Hold your EIS shares for at least three years and any profits are free of CGT. For a higher-rate taxpayer, this saves 24% on gains — a meaningful uplift on a successful investment.

CGT deferral relief

This is one of EIS's most powerful features for investors who have a capital gain they want to defer. Invest the gain into EIS within one year before or three years after the gain arises and the CGT bill is deferred until you sell the EIS shares. If you hold the EIS shares until death, the deferred gain may be extinguished entirely. This makes EIS particularly compelling for landlords selling buy-to-let properties and business owners taking chips off the table.

Loss relief

If the EIS company fails, you can claim loss relief on your net loss (original investment minus the 30% income tax relief already received). At the additional rate of income tax (45%), the maximum effective loss after all reliefs is around 38.5p in the pound — substantially better than an unrelieved loss.

Inheritance tax relief

EIS shares held for two or more years qualify for Business Relief, removing them from your estate for IHT purposes. With IHT at 40%, this benefit alone can justify EIS investment for estate planning purposes.

Who can invest in EIS?

You must be a UK taxpayer to claim EIS reliefs. You must also self-certify as either a High Net Worth Individual or a Sophisticated Investor before investing in most EIS opportunities — this is a regulatory requirement under FCA rules on financial promotions for unlisted investments.

The main restrictions are: you cannot be connected to the company (no more than 30% shareholding, not a paid employee), you must hold the shares for at least three years, and the investment must be in qualifying ordinary shares.

What companies qualify for EIS?

EIS qualifying rules are more flexible than SEIS, reflecting the wider range of companies that can use the scheme. Key criteria:

• Size: Fewer than 250 full-time employees, gross assets under £15 million before the EIS investment.
• Age: Must have its first commercial sale within the last seven years (or ten years for knowledge-intensive companies).
• Total EIS raised: No more than £12 million lifetime (£20 million for knowledge-intensive companies).
• Trade: Must carry on a qualifying trade — broadly commercial activities excluding financial services, property development, and energy generation.
• UK nexus: Must carry on business in the UK.
• Not listed: Cannot be traded on a recognised stock exchange.

EIS investment limits

Investors can put up to £1 million per tax year into EIS-qualifying companies. This rises to £2 million per tax year if the additional amount above £1 million is invested in knowledge-intensive companies — broadly defined as companies that invest heavily in R&D or employ a high proportion of skilled workers.

The income tax relief is capped at 30% of the amount invested, up to the annual limit — so a maximum of £300,000 income tax relief per year (or £600,000 if investing £2 million including knowledge-intensive companies).

The risks of EIS investing

EIS companies are unlisted, illiquid, and high risk. Most early and growth-stage companies do not deliver positive returns. The tax reliefs make the risk-reward profile more attractive, but they do not change the underlying risk of backing private companies.

• Illiquidity: You typically cannot sell EIS shares until a liquidity event. Plan for a five to ten year horizon.
• Company failure: Even with loss relief, failure means a real financial loss.
• Dilution: Later funding rounds dilute your stake.
• Clawback: If the company breaches EIS rules within three years, HMRC can reclaim the reliefs.
• Tax rule changes: EIS rules are set by government and can change — though the scheme has been in place since 1994 and has broad political support.

How to make an EIS investment

The main routes are direct investment into a specific company (via a platform, syndicate, or direct relationship), investment through an EIS fund managed by a professional fund manager, or via a specialist EIS manager who curates deal flow for high net worth investors. Each approach has different fee structures, minimum investment amounts, and levels of investor involvement.

Is EIS right for you?

EIS is well-suited to investors who have meaningful income tax or CGT liabilities, can afford to tie up capital for five or more years, and want exposure to growing UK companies outside of listed markets. It is particularly compelling for anyone with a capital gain to defer — a landlord selling a buy-to-let property, a business owner taking money off the table, or an investor rebalancing a portfolio with embedded gains.

It is not suitable as a core portfolio holding, and it is not a substitute for professional financial advice. Speak to an IFA with EIS experience before committing capital.