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Does my company qualify for EIS?

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Does my company qualify for EIS?

EIS for companies

To qualify for EIS, your company must meet certain criteria defined by HMRC

In order to raise capital that is eligible for Enterprise Investment Scheme tax relief, your company must:

  • 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

A company must first raise EIS funds within seven years of its first commercial sale. A company that has already raised EIS money within its first seven years, can do so again at any point in the future (up to a total of £10m, or £20m for knowledge intensive companies). A company that has not raised EIS funds before, and is now older than seven years, can still qualify if it raises money amounting to at least 50% of its five year average turnover, and spends that money on entering a new product market or geographic market.

In addition, you must follow the scheme rules so that investors can claim and keep EIS tax reliefs relating to their shares. Tax reliefs will be withheld or withdrawn from your investors if you don’t follow the rules for at least 3 years after the investment is made.


More information:

How can we raise money via EIS?

Step by Step Guide

What can EIS money be used for?

What trades are excluded?

What is EIS?

How much can we raise?

Do we have to be a UK company?

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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.