To celebrate 30 years of the Enterprise Investment Scheme Association, a new report has been released, in partnership with Beauhurst. The report looks into the impact of the Enterprise Investment Scheme on the UK economy over the last 30 years, along with its remarkable achievements.
According to the report, the number of individuals claiming tax relief via EIS has increased significantly over the years. Between 2011-12, the number of claims increased by 68.1%, rising from 11,330 to 19,044. By 2017-18, this figure had surged to 33,605—a 76.4% increase from 2011-12.18 The peak came in 2021-22, with 44,810 investors claiming EIS tax relief, before a slight dip to 40,485 in 2022-23.19 Despite this recent decline, investor numbers remain well above pre-pandemic levels, indicating sustained confidence in the scheme.
Investors are drawn to EIS for various reasons, including the potential for high returns and the tax returns and the tax relief that mitigates the risks of investing in early-stage companies. The scheme is designed to encourage investment in smaller, high-growth businesses, which can often offer substantial returns but also come with a higher level of risk. The appeal of EIS lies in its ability to attract a broad spectrum of participants, from individual retail investors looking to diversify their portfolios, to wealthier, more experienced investors who are willing to commit larger sums.
Crowdfunding has enabled more people to participate in EIS, allowing those with smaller capital to access opportunities traditionally reserved for wealthier individuals. This shift demonstrates that while the average investment size may have decreased, the overall number of participants has grown, showing continued confidence in the scheme.
This growing diversity among investors is also reflected in the range of investments made through EIS. A significant portion of investors contribute smaller amounts, with many investing less than £50k. In 2013-14, 39.6% of investors made investments under £10k, while 38.4% invested between £10k and £50k. By 2022-23, the share of smaller investments (under £10.0k) had increased to 51.4%, with those investing between £10k and £50k decreasing to 33.3%. This trend could be attributed to the growing number of angel investors making smaller investments, as well as certain funds, such as Haatch and Jenson, lowering their minimum investment thresholds to as little as £2.00k.
Read the full Enterprise Investment Scheme Association Beauhurst report here
Read the full Enterprise Investment Scheme Association Beauhurst report here
