What is the Enterprise Investment Scheme (EIS)?
The EIS is a UK government initiative designed to encourage investment in early-stage businesses by providing tax reliefs to investors. This scheme, established in 1994, allows businesses to raise capital while offering investors tax incentives, making it an attractive option for both parties.
Key Features of the EIS
- Tax Benefits: Investors receive tax reliefs for purchasing new shares in eligible companies.
- Funding Limits: Companies can raise up to £5 million annually and £12 million over their lifetime.
- Eligibility Period: The scheme applies to investments made within seven years of a company’s first commercial sale.
Company Eligibility
To qualify for the EIS, a company must meet the following criteria:
- Not listed on the main stock exchanges (AIM and Aquis are exceptions).
- Independent and not controlled by another company.
- Limited control over non-qualifying subsidiaries.
- Gross assets not exceeding £15 million before and £16 million after share issuance.
- Fewer than 250 full-time employees.
- Permanent establishment in the UK.
- Adheres to state aid risk finance limits.
Knowledge-Intensive Companies
Knowledge-intensive companies can benefit from relaxed EIS criteria:
- Fewer than 500 employees.
- Significant research, development, or innovation activities.
- Potential to raise more than the usual EIS limits.
Applying for EIS
Companies can apply for EIS by:
- Securing advance assurance from HMRC.
- Issuing shares.
- Submitting a compliance statement (EIS1) to HMRC.
Combining EIS with Other Schemes
The EIS can be combined with other funding schemes, subject to a £5 million annual cap and a £12 million lifetime limit from all sources.
By ensuring compliance with EIS rules, PropertyCard can attract investors and leverage the tax benefits to support its growth and development.
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