The Enterprise Investment Scheme (EIS) celebrated its 30th anniversary last year, having facilitated over £34 billion in private investment across more than 59,000 businesses. Despite this success, it remains one of the best kept secrets.
With capital often difficult to access for early-stage businesses, the EIS, alongside its sister scheme, the SEIS, are vital routes to growth.
The government provides investors with generous tax incentives to invest in early stage businesses.
While the 30% EIS and 50% SEIS income tax reliefs often grab the headlines, exemption from Capital Gains Tax (CGT) can be equally – if not more – valuable, especially given the recent changes in the Autumn Budget.
What are the benefits for EIS investors?
Below is an overview of the Enterprise Investment Scheme benefits for those who make successful investments.
Enterprise Investment Scheme (EIS)
- 30% income tax relief on investments up to £1 million per annum (or £2 million if at least £1 million is in knowledge-intensive companies)
- Exemption from Capital Gains Tax (CGT) after holding shares for 3 years
- CGT deferral for gains reinvested into EIS companies
- Loss relief available if the investment fails
- Up to 100% Inheritance Tax (IHT) relief after two years
Seed Enterprise Investment Scheme (SEIS)
- 50% income tax relief on investments up to £200,000 per annum
- Exemption from Capital Gains Tax (CGT) after holding shares for 3 years
- 50% CGT relief on gains reinvested into SEIS companies
- Loss relief available if the investment fails
- Up to 100% Inheritance Tax (IHT) relief after two years
If you are considering investing in a fund, it’s worth asking the manager about their deployment times if you are hoping to claim the relief in a specific tax year.
If you would like further information on the tax reliefs associated with EIS or SEIS investing, visit the guides on our website.
Many businesses succeed with EIS funding but loss relief is there when they don’t
The importance of the EIS and SEIS to the UK’s economy is highlighted in our report produced last September in partnership with Beauhurst.
The report found that there has been £192 billion total turnover from EIS backed companies since 2014. In 2023 alone, EIS and SEIS investee businesses generated £28.2 billion in turnover and employed 386,000 people.
These incentives have helped build some of the UK’s most recognisable brands, including Deliveroo, Bloom & Wild, Charlotte Tilbury, Just Eat, Revolut, Monzo, Trinny London, TALA, Pip & Nut, Depop, Lucky Saint and Zoopla.
In fact, 46.5% of UK unicorns (privately owned companies valued at over $1 billion) have received investment through the EIS.
However, not every investment will work out. That is where the loss relief comes in, helping to mitigate the risk of investing in early-stage businesses.
EIS loss relief allows investors to claim relief on losses from unsuccessful EIS investments against their income or capital gains tax, reducing the overall financial risk.
Additionally, when investing through a fund, an SEIS or EIS investment will typically be spread across a number of different companies. Investors may therefore experience a situation where the value of the portfolio is up overall, but one of the companies has failed and so loss relief can be claimed on that part of the investment.
Who is investing through the Enterprise Investment Scheme?
Our anniversary report revealed that over 35,000 people invested through the Enterprise Investment Scheme in 2023/4 and a record 10,145 people invested through the SEIS.
There has been increased interest in investing through the schemes in recent months, particularly since the government announced that pensions would be subject to inheritance tax from April 2027. A survey by IFA Magazine and Blackfinch found that 56% of IFAs said they ‘definitely did’ or ‘possibly did’ have clients now considering EIS who hadn’t before the 2024 Budget.
We are also seeing changes in the profile of investors across the EIS/SEIS ecosystem.
A number of funds have reported an increased interest from younger investors, as well as older clients drawing down their pensions.
The schemes are increasingly being embraced by a wider range of investors, not just the ultra-wealthy and the amounts individuals are investing are less than most might assume. More than 50% of EIS investors invest £10,000 or less. We have also seen more EIS and SEIS fund managers offering lower minimum investment amounts in recent years.
These changes are helping to democratise access to the EIS, resulting in a wider range of investors gaining access to early-stage investing.
We are working hard to raise awareness and a recent report from the Startup Coalition highlighted the issue, sharing that “founders regularly tell us that knowledge of these schemes is low, especially outside of London.”[1]
We hope to see an even more diverse investor profile as we work to raise awareness for underrepresented investors, particularly female angels.
Key considerations that need to be made before an EIS investment
There are important things to keep in mind when discussing how an EIS investment might work in practice – particularly around timescales and operational processes.
While investors may be keen to receive relief within the same tax year, it’s important to note that this is not guaranteed by all fund managers. Timelines vary due to deployment delays, HMRC processing times, and other operational factors.
Investors must also hold the shares for at least three years to obtain the relief.
To support real understanding for investors, it’s important to set realistic timeframes upfront and explain that investments can take several months to fully deploy, and this does vary depending on the fund manager. Knowledge Intensive EIS funds also have the same tax reliefs as EIS but slightly different rules and limits.
There are many EIS and SEIS funds, so if you would like to explore if they are the right fit for your client, be sure to ask them questions around their deployment and timeframes to ensure this aligns with your client’s needs.
You might also like to find a fund that matches specific interests of your investor, such as one that exclusively invests in female founders, life sciences or green tech businesses.
You can visit the EIS Association’s directory here to explore information on many EIS and SEIS funds.
The Enterprise Investment Scheme and Seed Enterprise Investment Scheme continue to receive cross parliamentary support, and the current government has been vocal about the importance of these schemes.
As awareness grows, EIS and SEIS investment becomes more accessible to a wider range of investors and it’s crucial for advisers to understand both the benefits and the practical realities of investing through the schemes. If you would like to learn more about investing through the schemes, or about the EIS Association, visit our website here.
[1] https://api.startupcoalition.io/u/2025/05/FTUF_Female-Founders_FOR_RELEASE.pdf
By Olivia Wing
Olivia is the Community Development Manager at the Enterprise Investment Scheme Association, the industry body for the Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS).
Olivia speaks at ecosystem events across the United Kingdom, helping to educate and connect those involved in supporting early-stage businesses.
The EIS Association offers a free membership to financial advisers. Learn more here.
