EIS Tax Relief Calculator 2025/26

What Is the Enterprise Investment Scheme (EIS)?

The Enterprise Investment Scheme (EIS) is one of the UK government's longest-running venture capital tax incentive programmes, established in 1993. It is designed to help growth-stage, higher-risk private companies raise equity finance from individual investors by offering a highly attractive package of tax reliefs. EIS sits between the very-early-stage SEIS (for companies under 3 years old) and the professionally managed, listed VCT fund structure — targeting companies that have moved past initial seed stage but are not yet ready for main-market equity financing.

In the 2025/26 tax year, an individual investor can claim 30% income tax relief on EIS investments of up to £1,000,000 per tax year (£2,000,000 for knowledge-intensive companies). This means a maximum income tax reduction of £300,000 in a single year for standard EIS or £600,000 for KIC-qualifying investments. Like SEIS, EIS relief cannot exceed your actual income tax liability for the year — it reduces your tax bill, not below zero.

EIS Company Eligibility Conditions

For an EIS share issue to qualify, the company must satisfy HMRC's conditions at the time of and throughout the relevant period:

• UK-based: The company must be UK-incorporated with a permanent UK establishment.
• Unquoted: Shares must not be listed on a recognised stock exchange. AIM-listed companies are generally EIS-qualifying; main market companies are not.
• Size: Fewer than 250 full-time equivalent employees (500 for KICs). Gross assets must not exceed £15 million immediately before the share issue (£16 million after).
• Age: The first commercial sale must have occurred within the last 7 years (10 years for KICs).
• Trade: Must carry on a qualifying trade. Excluded activities include property development, financial services, energy generation (most types), hospitality, and legal/accountancy services.
• Fundraising cap: Total risk finance (EIS + SEIS + VCT + other state-aided finance) must not exceed £12 million in total (£20 million for KICs). No more than £5 million per 12-month period.

Knowledge-Intensive Companies (KICs) — The £2M Limit

The KIC category was introduced to provide additional support for companies that invest heavily in innovation and intellectual property. A company qualifies as a KIC if it meets one of two tests:

• R&D expenditure test: At least 15% of operating costs in the current year OR at least 10% in each of the three preceding years were attributable to innovation/R&D activity.
• Innovation test: The company is creating or has created intellectual property that represents (or will represent) the majority of the company's value.

For KICs, the investor annual limit doubles from £1,000,000 to £2,000,000, and the company lifetime fundraising cap rises to £20,000,000. KICs also benefit from a longer eligible age window of 10 years from first commercial sale. Examples include deep tech, life sciences, advanced engineering, and AI/software companies with significant IP development.

How EIS CGT Deferral Works

EIS CGT deferral is one of the most powerful tax planning tools available to UK investors. Unlike the limited 50% CGT exemption under SEIS, EIS allows you to defer 100% of any capital gain — of any size — by reinvesting that gain into qualifying EIS shares. The key rules are:

• The gain must arise from the disposal of any chargeable asset (not just EIS shares).
• The reinvestment into EIS shares must occur within 1 year before, or 3 years after, the date of the disposal that generated the gain.
• There is no upper cap on the amount of gain that can be deferred.
• The deferred gain becomes a crystallised gain and is taxable when the EIS shares are disposed of (unless the deferral is rolled into another EIS investment).
• If the investor dies while holding the EIS shares, the deferred gain is extinguished — it is never taxed. This makes EIS CGT deferral particularly valuable as an estate planning tool.

EIS Loss Relief

EIS loss relief protects investors when a company fails. The loss is calculated as the original investment minus any income tax relief received, minus any disposal proceeds (if the shares had some residual value). This net loss can be set against income in the year of the loss, or carried back to the previous year. A higher-rate taxpayer investing £100,000 in EIS receives £30,000 income tax relief. If the company fails and the shares are worthless, the net loss is £70,000. Set against income at 40%, the loss relief is £28,000. Total government support: £58,000 out of a £100,000 investment — limiting the investor's actual loss to just £42,000.

EIS Funds vs Direct Investment

Investors can access EIS either through direct investment in individual companies or via EIS fund managers who pool capital across a portfolio of EIS companies. Direct investment offers greater control, the ability to choose specific sectors or companies, and potentially higher returns if you back the right business. However, it requires significant due diligence capability and concentrates risk in one company.

EIS funds spread the same tax reliefs across a portfolio of companies — typically 10 to 30 companies. This significantly reduces the risk of total loss, as gains from successful companies can offset losses from failures. Most EIS fund managers charge annual management fees of 1–2% plus a performance fee (typically 20% of returns above a hurdle rate). Prominent EIS fund managers include Octopus Investments, Calculus Capital, Mercia Asset Management, and Downing LLP.

The EIS3 Certificate and How to Claim

To claim EIS income tax relief, you need an EIS3 certificate issued by the company (or EIS fund manager). This is the HMRC compliance document confirming the share issue is EIS-qualifying. The process is identical to SEIS: you enter the EIS3 details on your Self Assessment tax return under "Other tax reliefs." HMRC then reduces your income tax liability by 30% of the amount invested.

For CGT deferral, you claim the relief using the SA108 Capital Gains Summary supplementary pages on your tax return. You enter the disposal details, the reinvestment amount, and elect the deferral. HMRC will hold the gain in suspension until the EIS shares are sold. Always apply for HMRC Advance Assurance before investing to gain comfort on qualifying status.

EIS vs SEIS vs VCT: Full Comparison