EIS Tax Relief Calculator

How EIS Tax Relief Works

The Enterprise Investment Scheme encourages investment in early-stage UK companies by offering generous tax reliefs:

1. Income Tax Relief (30%)

• Claim 30% of your investment back as income tax relief
• Maximum investment: £1 million per year (£2 million for knowledge-intensive companies)
• Relief can be claimed against current year or previous year tax
• You need sufficient income tax liability to claim the full relief

2. Capital Gains Tax Deferral

• Defer any capital gain by reinvesting it into EIS shares
• No time limit on when the original gain was made
• The deferred gain becomes due when you sell the EIS shares
• If held until death, the gain may be eliminated entirely

3. Tax-Free Growth

• Any gains on EIS shares are completely tax-free
• Must hold shares for at least 3 years
• No capital gains tax on disposal

4. Loss Relief

• If the company fails, claim loss relief on your investment
• Loss = Investment - 30% income tax relief already claimed - sale proceeds
• Offset against income tax (most valuable) or capital gains
• Maximum downside for 45% taxpayer: just 38.5% of original investment

EIS Investment Example

Qualifying for EIS

Investor Requirements

• Must be UK taxpayer
• Cannot own more than 30% of the company (or have owned in previous 2 years)
• Cannot be an employee of the company (directors are allowed)
• Shares must be new ordinary shares, fully paid in cash

Company Requirements

• UK permanent establishment
• Gross assets under £15 million before investment
• Fewer than 250 employees
• Less than 7 years old (10 for knowledge-intensive companies)
• Qualifying trade (excludes property, finance, legal services, etc.)
• Not listed on main stock exchange

EIS Tax Relief: Maximising Your Benefits in 2025/26

The Enterprise Investment Scheme offers a powerful combination of tax reliefs that, when used strategically, can significantly reduce your overall tax liability while supporting the growth of innovative UK companies. For the 2025/26 tax year, the fundamental rules of EIS remain unchanged, but savvy investors can maximise their benefits through careful use of carry-back provisions, CGT deferral, loss relief planning, and portfolio diversification.

Carry-Back Rules and Timing Your Investment

One of the most valuable but often overlooked features of EIS is the ability to carry back income tax relief to the previous tax year. If you make an EIS investment during the 2025/26 tax year (6th April 2025 to 5th April 2026), you can elect to treat all or part of that investment as though it were made in the 2024/25 tax year. This is particularly useful if your income was higher in the previous year -- for example, if you received a large bonus, sold a business, or had exceptional earnings from self-employment.

The carry-back is subject to the annual investment limit for the year to which the relief is carried back (£1 million, or £2 million if at least £1 million is invested in knowledge-intensive companies). By planning the timing of your EIS investments around the end of the tax year, you can effectively double the relief available across two years. For example, investing £1 million in March 2026 and carrying back to 2024/25, then investing a further £1 million in April 2026 for the 2025/26 year, could generate up to £600,000 in income tax relief across the two years. Always work with a qualified tax adviser to ensure carry-back elections are made correctly and within the required time limits.

Capital Gains Tax Deferral and Long-Term Planning

EIS CGT deferral is one of the scheme's most compelling features for investors with existing capital gains. Unlike SEIS, which offers a 50% exemption on reinvested gains, EIS provides a full deferral of the gain -- meaning 100% of the capital gain is deferred until the EIS shares are disposed of. There is no limit on the amount of gain that can be deferred, and critically, there is no time limit on when the original gain must have arisen. A capital gain from a property sale five years ago can still be deferred by investing in EIS shares today.

The most powerful aspect of EIS CGT deferral emerges in long-term planning. If you hold EIS shares until death, the deferred gain is eliminated entirely under current rules. Your heirs inherit the shares at their market value on the date of death, and neither the deferred gain nor any growth on the EIS shares is subject to Capital Gains Tax. This makes EIS an important tool in estate and inheritance planning, particularly for individuals with substantial unrealised capital gains from property, business sales, or other investments.

Loss Relief and Portfolio Strategy

While EIS investments carry inherent risk -- the companies are typically young, unquoted, and may not yet be profitable -- the loss relief provisions provide significant downside protection. If an EIS-qualifying company fails and the shares become worthless (or are sold at a loss), the investor can claim loss relief on the net loss after deducting the 30% income tax relief already received. This loss can be set against either income tax or capital gains tax, depending on which produces the greater benefit.

For additional rate taxpayers (45%), the maximum net loss on a failed EIS investment is just 38.5% of the original amount invested, once both the 30% income tax relief and loss relief at 45% on the remaining 70% are taken into account. For higher rate taxpayers (40%), the maximum downside is 42%. This asymmetric risk-reward profile -- where the upside on successful investments is entirely tax-free while the downside is heavily cushioned by tax reliefs -- is what makes EIS so attractive to experienced investors.

Building a diversified EIS portfolio across multiple companies and sectors is widely regarded as best practice. Research from the UK Business Angels Association and various EIS fund managers suggests that a portfolio of ten or more EIS investments significantly improves the probability of achieving positive overall returns. Many investors choose to access EIS through managed funds that invest across a spread of qualifying companies, providing professional due diligence, portfolio management, and diversification that would be difficult to achieve through individual direct investments alone.