Raising capital using the EIS

The Enterprise Investment Scheme (EIS) has been designed to increase investment in the early development of high potential growth businesses. Companies seeking EIS investment are typically more developed than those looking for funding using the Seed Enterprise Investment Scheme (SEIS) and the investment limits and tax reliefs available reflect this. 

The maximum amount of funds that a company can raise through investments qualifying for the EIS is £5M in any 12 months with a maximum of £12m over the company’s lifetime. The company must receive investment under a venture capital scheme within 7 years of its first commercial sale.

There is a maximum limit on the number of employees that the investee company can have when shares are issued. The company must have less than 250 full-time employees or their part-time equivalents. For groups of companies, the limit applies across the group.

The company’s gross assets (or of the group assets where the company is a parent company) must not exceed £15 million before any shares are issued and not be more than £16 million immediately afterwards.

There are also time limits when investments can be raised by the company and how and when the money must be spent. 

There are different rules, typically more generous criteria, for ‘knowledge-intensive’ companies that carry out a significant amount of research, development or innovation.

Source: HM Revenue & Customs Tue, 05 Oct 2021 00:00:00 +0100

Latest articles

Notifying cessation of self-employment

Any taxpayers that have ceased to be self-employed must notify HMRC of their change in status. There are a number of steps that must be followed if a taxpayer ceases trading as a sole trader or if they are ending or leaving a business

Submitting CIS nil monthly returns

The Construction Industry Scheme (CIS) is a set of special rules for tax and National Insurance for those working in the construction industry. Businesses in the construction industry are known as ‘contractors’ and ‘subcontractors’ and should be

Check employment status for tax

The Check Employment Status for Tax (CEST) tool can be used to help ascertain if a worker should be classified as employed or self-employed for tax purposes in both the private and public sector.

The service provides HMRC’s view if IR35 legislation

Class 1A payment deadline

Class 1A NICs are paid by employers in respect of most benefits in kind provided to employees such as a company car. There is no employee contribution payable. If you provided taxable benefits to staff or directors your business is likely to have a