Enterprise Investment Scheme (EIS)

Want to grow your portfolio in 2022? Discover the tax efficient benefits of the Enterprise Investment Scheme.

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What is the Enterprise Investment Scheme (EIS)?

The Enterprise Investment Scheme (EIS) is a Government backed initiative which helps smaller yet higher-risk businesses (SMEs) to raise finance and have a platform for growth.

The Government offers significant tax reliefs to investors to support the flow of capital to these fledgling businesses.

The scheme was introduced in 1994 and is a well-established part of the UK investment and tax landscape.

The Benefits of Investing in an EIS

Investing in an EIS can have a number of benefits notably if you have used up your allowances for pensions and individual savings accounts (ISA’s).

It can be useful for older investors if you have a large Inheritance Tax Liability, as the investments can be passed on Inheritance Tax free, if you have held them for two years and at time of death. 

  • 30% Income Tax rebate on new investments up to £1m-worth of assets in the tax year
  • Tax-free growth, capital gains deferral, inheritance tax relief and loss of relief on exit
  • 30% Income Tax rebate on new investment up to £2m-worth of assets, if at least £1 million is invested in knowledge-intensive companies
  • Carry back feature for tax relief on eligible investments to a previous year
Pension consolidation pie chart

How does an Enterprise Investment Scheme differ from a Venture Capital Trust

The key differences between Enterprise Investment Schemes and Venture Capital Trusts (VCTs) are the tax reliefs and investment approaches. 

The 30% income tax relief is the same for both but the minimum hold period for EIS investments is 3 years (for a VCT its 5 years) to qualify for all their tax reliefs.  A VCT would not qualify for carry back tax relief either.

EIS Funds Examples

Below are examples of EIS Funds that give an idea of the types of investments that BulbFin Advisers can help with:

Draper Esprit EIS. Encore Ventures LLP continues to raise a target amount of £30m to £40 million for Draper Esprit EIS Fund for the 2021/2022 tax year, to invest in EIS-qualifying companies across a range of sectors. The fund targets 8-12 investments over an investment period of 12-18 months. The Fund originally launched in October 2012.

MMC Ventures EIS. MMC Ventures Ltd raises funds for the MMC EIS Fund which launched in 2005 and has invested £211 million across 62 companies (June 2021) raising over £290 million since inception. The offer is open to both new and existing shareholders and is offered as an evergreen (multi-cohort) service.

Parkwalk Opportunities EIS. Parkwalk Advisors Limited is looking to raise approximately £80 million for Parkwalk Opportunities EIS Fund for the 2021/22 tax year. It seeks to identify and invest in EIS-qualifying companies that are well placed to commercialise or exploit technologies developed by research teams at UK universities. The Service launched in 2013.

Fund NameStrategyEIS Risk Level Offer SizeMin SubscriptionMax Qualifying Subscription/Tax Year
Draper Esprit EIS
Technology,
Healthcare
Medium£30-40 million£25,000
£1,000,000
MMC Ventures EISSpecialist TechnologyMedium
 Evergreen£25,000£1,000,000
Parkwalk Opportunities EISTechnology focussedMedium
 Evergreen
 £25,000
£1,000,000
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The Benefits of Pension Consolidation

Frequently Asked Questions – EIS

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Risk Warning
Any investment carries a degree of risk and your investments may decrease in value or fail. The levels and bases of taxation and reliefs can change at any time and are dependent on individual circumstances.