The Enterprise Investment Scheme (EIS) is a governmental initiative designed to support early-stage companies by offering a crucial source of finance, while also providing tax incentives to investors.
The Advantage of Investing Early
Investing early in the shares of a burgeoning small business can be a powerful way to enhance personal wealth, especially if the business experiences significant growth. Investing early increases the potential rewards to you as a shareholder. Nonetheless, like any investment, it’s important to remember that EIS investments carry a high level of risk.
Since its inception in 1994, the EIS has made investing in early-stage companies more appealing. For businesses that meet EIS criteria, investors can access various tax reliefs with their investment, such as immediate income tax relief, exemption from capital gains tax, and relief on losses for investments that underperform. It’s crucial to note that tax regulations can evolve, and the benefits of tax reliefs are contingent on individual circumstances.
Purpose of the EIS
The EIS tax reliefs are a governmental effort to motivate investments into early-stage, high-potential growth businesses. This initiative is rooted in the understanding that small businesses that evolve into successful enterprises play a crucial role in job creation and driving economic expansion within the UK.
Since the launch of the EIS, over 53,000 early-stage businesses have received a boost from approximately £30 billion in investments. In the fiscal year 2021-22, EIS-eligible companies garnered £2.3 billion. Investing in EIS-qualified companies not only presents an opportunity for personal financial growth but also contributes to the future economic