The EIS (Enterprise Investment Scheme) is a scheme introduced by the government in 1994 to help small companies raise funds and grow. When you as a private investor invest in an EIS-qualifying company, you could receive very significant tax breaks.

HMRC has defined a range of criteria to ensure that the EIS scheme is not misused. So, for example, qualifying companies should:

  • 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
  • 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 (this would be the case if Holdings owns a majority of software)
  • not have gross assets worth more than £15 million before any shares are issued and not more than £16 million immediately afterwards (property will be above this level anyway)
  • have fewer than 250 full-time equivalent employees at the time the shares are issued
  • carry out a qualifying trade, see below:

The trades that DO NOT qualify for EIS are as follows:

  • coal or steel production
  • farming or market gardening
  • leasing activities
  • legal or financial services
  • property development (rental is included within this)
  • running a hotel
  • running a nursing home
  • generation of electricity, heat, gas or fuel

For further info on how you can benefit from EIS or get further details on the scheme, speak to one of our team!

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