The Enterprise Investment Scheme (EIS) is one of the UK Government’s most powerful, yet often misunderstood, incentives for early-stage investment. For investors willing to support innovative start-ups and scale-ups, it offers significant tax benefits and a meaningful way to back British business.
What Is EIS?
Introduced in 1994, the EIS was designed to encourage investment in small, unlisted companies that carry higher risk but higher growth potential. By investing in EIS-eligible businesses, investors can access:
- Income tax relief of up to 30% on investments up to £1 million per tax year
- Capital gains tax (CGT) deferral on other investments when reinvested through EIS
- No CGT on disposal of EIS shares held for at least three years
- Loss relief if the investment performs poorly
- Inheritance tax relief if held for two years
Why It Matters to Today’s Investors
In an environment where traditional investments face tighter margins and increasing taxation, EIS offers both upside potential and a tax-efficient cushion against downside risk. It’s not just for high-net-worth individuals, either, more and more retail investors are seeing the value in diversifying into this space.
Quaneqo Group share their insights:
“EIS is one of the best-kept secrets in UK investment. You’re backing cutting-edge innovation, helping to grow real businesses — and the tax benefits can be game-changing. For clients looking to build wealth tax-efficiently, it’s a key part of the conversation.”
While EIS isn’t for everyone, due diligence is critical, and investments can be illiquid, its place in a well-diversified portfolio is hard to ignore, especially in today’s fast-moving market.
