Introduced by the UK government in 1994, the Enterprise Investment Scheme (“EIS”) is a scheme that aims to encourage individuals to invest in early-stage companies and start-up businesses by offering significant tax reliefs to individual investors who acquire new shares in qualifying companies, thereby helping these qualifying companies to raise funds and ultimately grow their businesses. 

Following the 2025 Autumn Budget, the UK Government announced that there would be a number of changes to the EIS rules, which took effect from 06 April 2026.  

Conditions relating to the issuing company and the shares

• The value of the issuing company’s gross assets must not exceed £30 million immediately before the shares are issued, and not more than £35 million immediately afterwards. Previously, the gross assets limit was £15 million before the share issue and £16 million immediately after. 
• The issuing company must not raise more than a lifetime amount of £24 million (£40 million for knowledge-intensive companies), increasing from £12 million (and £20 million for knowledge-intensive companies). 
• the issuing company cannot raise more than £10 million (£20 million for knowledge-intensive companies) within a 12-month period. The limit was previously £5 million and £10 million for knowledge-intensive companies). 

Unchanged Conditions relating to the issuing company and the shares

The issuing company:

• must have a permanent establishment in the United Kingdom. 
• must not be trading on a recognised stock exchange at the time of the share issue nor intend to do so.
• must not control another company other than qualifying subsidiaries. 
• must not be controlled by another company, or must not have more than 50% of its shares owned by another company. 
• must not expect to close after completing a project or series of projects. 
• must have fewer than 250 full-time equivalent employees at the time the shares are issued (or fewer than 500 full-time employees if it is a knowledge-intensive company) – where the company is a member of a group, the limit is applied to the group as a whole.
• must carry out a qualifying trade, on a commercial basis, with a view to making profits, and the trade must not consist of a substantial amount (with HMRC generally interpreting ‘substantial’ as more than 20%) of excluded activities, which include: 
• coal or steel production
• farming or market gardening
• leasing activities
• legal or financial services
• property development
• running a hotel
• running a nursing home
• generation of energy, such as electricity and heat
• production of gas or other fuel
• exporting electricity
• banking, insurance, debt or financing services
• must use the money raised from the share issue for a qualifying business purpose, such as carrying on a qualifying trade, preparing to start a qualifying trade within two years, or undertaking research and development intended to lead to a qualifying trade.
• must generally receive its first EIS investment within 7 years of making its first commercial sale, although longer time limits may apply in certain cases, including for knowledge-intensive companies.
• must issue ordinary shares that are fully paid for in cash, cannot be redeemed, and do not give investors any special or preferential rights. The shares must carry genuine investment risk.

Conditions relating to Investors 

As with the Seed Enterprise Investment Scheme (“SEIS”), there are specific requirements an investor must meet to qualify for the EIS tax benefits:

• the investor must have sufficient UK income tax liability against which the relief can be set.  
• the investor must subscribe for new ordinary shares that do not carry any special or preferential rights. If the investor already holds shares in the company, those shares must be qualifying shares that do not prevent EIS relief from being claimed.
• the investor, or any “associate” (e.g. family members or close business partners), must not be connected to the company during the period starting two years before and ending three years after the share issuance. When an investor or their associate is “connected” to a company, it generally means that there is a relationship that could potentially influence the investor’s decision-making or create a conflict of interest, which could undermine the independence of the investment. 

EIS Income Tax relief 

When acquiring new shares, investors can claim Income Tax relief either in the tax year in which they make the investment, or in the preceding tax year, provided they opt to treat all or part of the investment as being made in the prior year. The investor is entitled to the following reliefs:

Scheme	Maximum Annual Investment Eligible for Relief	Percentage of Investment Eligible for Relief
EIS	£1 million (or £2 million if at least £1 million of that is invested in knowledge-intensive companies)	30%

Investors can only claim tax relief up to the amount of Income Tax they have paid in the UK. Any unused relief cannot be carried forward to future tax years.

EIS CGT relief 

Investors who participate in the EIS may be eligible for various Capital Gains Tax (“CGT”) reliefs or deferrals when they dispose of their shares as follows:

Scheme	CGT Deferral Relief	CGT Exemption on Disposal	Relief for Capital Losses Against Income
EIS	100% deferral of chargeable gains reinvested into EIS shares.	Gains on EIS shares are exempt from CGT where the qualifying conditions are met.	Losses (net of EIS income tax relief claimed) may generally be set against income or capital gains, subject to the applicable rules.

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Moorcrofts expects EIS and SEIS to remain popular and viable options for investors to gain valuable income tax savings on their investments and for companies to attract investment. 

For assistance, please get in touch with our corporate team and we would be happy to help.