The EIS Scheme: A Guide for SMEs and Investors in the UK in 2023

A Guide for SMEs and Investors in the UK in 2023

The Enterprise Investment Scheme (EIS) is a UK government initiative aimed at supporting small and growing businesses by providing tax reliefs to individual investors who invest in eligible companies. The scheme is designed to encourage investment in high-risk, high-potential companies and help them raise the capital they need to grow and succeed.

Here's how the EIS scheme works in 2023 for SMEs and investors:

For SMEs:

  • The company must be a UK-registered business that has not been trading for more than 7 years.

  • The company must have fewer than 250 employees and gross assets worth less than £15 million.

  • The company must be seeking to raise less than £15 million in investment.

  • The company must be working on a new business idea that has high growth potential.

  • The company must not be involved in certain prohibited activities, such as property development.

 

For Investors:

  • The investor must be a UK taxpayer.

  • The investor must subscribe for new ordinary shares in the company.

  • The investment must be made into a company that meets the EIS criteria.

  • The maximum investment that can be made is £1 million per tax year.

  • The investor can receive 30% tax relief on the investment, which means that if they invest £10,000, their liability will be reduced by £3,000.

  • In addition, any gains made on the investment will be exempt from capital gains tax.

Statistics:

  • Since its introduction in 1994, the EIS scheme has supported over 25,000 companies and raised over £20 billion in investment.

  • The average investment per company is £1 million, and the average investment per investor is £50,000.

  • In the 2019/2020 tax year, over 50,000 individuals claimed EIS relief, with a total of £1.3 billion in relief claimed.

  • Eligible SMEs can apply for funding through the EIS scheme by meeting the criteria outlined above.

  • Investors can receive significant tax benefits by investing in eligible companies through the EIS scheme.

  • The EIS scheme has a proven track record of supporting small businesses and raising investment.

Eligible SMEs can apply for funding through the EIS scheme by:

  • Being a UK-registered business that has not been trading for more than 7 years.

  • Having fewer than 250 employees and gross assets worth less than £15 million.

  • Seeking to raise less than £15 million in investment.

  • Working on a new business idea that has high growth potential.

  • Investors can receive tax benefits by:

    • Being a UK taxpayer.

    • Subscribing for new ordinary shares in the company.

    • Investing in a company that meets the EIS criteria.

    • Receiving 30% tax relief on the investment.

    • Having any gains made on the investment exempt from capital gains tax.

EIS, Business Growth, Seed, RaisingKatrina YoungRaising Funds, Seed RaisingComment