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What are the risks of EIS?

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What are the risks of EIS?

EIS for investors

Investing in EIS-qualifying businesses is high risk and it is likely you will lose some or all of your original investment.

Investing in small, growth companies (the type that tend to qualify for EIS) always carries risks. These risks include:

  • Partial or total loss of capital
  • Illiquidity - i.e. the inability to sell your shares quickly or without a substantial loss in value
  • No dividends paid to shareholders
  • Share dilution - or the reduction in value of your shares because more shares are issued

The benefits of The Enterprise Investment Scheme (EIS) help mitigate some of these risks by providing up to 30% tax relief, plus a potentialreduction in your net losses, through loss relief.


More information:

An EIS example

Step by Step Guide

What kind of companies can I invest in?

What are the benefits?

What is EIS?

Do I qualify for 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.