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What kind of companies can I invest in?

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What kind of companies can I invest in?

EIS for investors

Companies that qualify for the Enterprise Investment Scheme need to satisfy certain criteria.

The Enterprise Investment Scheme is focused on helping early-stage and growth companies raise capital from private investors. The UK Government wants the money raised under EIS to be used for suitable purposes and by companies that could go on to scale and provide employment opportunities.

HMRC has defined a range of criteria to ensure that the scheme is not misused. So, for example, qualifying companies should:

  • Be established in the UK
  • Not trading on a recognised stock exchange at the time of the share issue and is not planning to do so (also known as an unquoted company)
  • Not control another company other than qualifying subsidiaries
  • Not be controlled by another company or not have more than 50% of its shares owned by another company
  • Not have gross assets worth more than £15 million before any shares are issued and not more than £16 million immediately afterwards
  • Have fewer than 250 full-time equivalent employees at the time the shares are issued
  • Carry out a qualifying trade

The trades that DO NOT qualify for EIS are as follows:

  • Coal or steel production
  • Farming or market gardening
  • Leasing activities
  • Legal or financial services
  • Property development
  • Running a hotel
  • Running a nursing home
  • Generation of electricity, heat, gas or fuel

More information:

An EIS example

Step by Step Guide

What are the benefits?

What is EIS?

Do I qualify for EIS?

What are the risks of EIS?

How do I invest using EIS?

Where can I find EIS opportunities?

When can I claim my EIS tax relief?

How do I claim for a previous year?

How does EIS work for jointly held shares?

How do I defer a capital gain?

EIS Infographic

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PLEASE NOTE:

To qualify for EIS relief, investors must be UK resident for tax purposes (or have UK tax liabilities) and subscribe cash for new shares in qualifying companies. Tax treatment is dependent on individual circumstances and may be subject to change. This content is written in general terms and you are strongly recommended to seek specific advice before taking any action based on the information it contains. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this content. It is also important to realise that investing in small companies always carries risks, including the loss of capital, illiquidity (the inability to sell assets quickly or without substantial loss in value), lack of dividends and share dilution. Investments should still be made as part of a diversified portfolio.