EIS Knowledge Hub

What is EIS?

• EIS is the Enterprise Investment Scheme.
• It’s a range of tax reliefs the Government provides when people invest into certain small to medium sized early stage companies.
• Tax reliefs are designed to incentivise certain behaviours – ISAs encourage regular saving habits, pension tax relief encourages people to save for their retirement. EIS reliefs encourage investment into companies where the investment risks are higher – the reliefs are designed to compensate for some of these incremental risks.
• The EIS was introduced in 1994 and has been a huge success story for the UK. It has played a key role in creating one of the best places to start and grow a business in the world. Consistently supported by all political parties, the EIS ‘sunset clause’ has recently been extended until 2035.
• Small early stage companies can be exciting investments. The companies may be building new technology, growing new sectors, or changing how things are done. They have the potential to grow significantly in value if successful. But they are also much more likely to fail than more established businesses. And investors are unlikely to be able to choose when to sell an investment.

How does it work

• Investments have to be made into the shares as a subscription for a new issue of shares into EIS qualifying companies. Specialist managers can identify EIS qualifying companies for you, or you may find one yourself. If you want to understand more about how investments qualify for EIS relief, click here.
• EIS investments provide qualifying companies with capital they need to invest in business growth and employment. Investors should expect to remain invested for a meaningful amount of time, typically 5 years or more, while the company pursues its growth strategy. Exits typically arise for all investors as a group, if the company reaches a size where it finds a buyer or lists.
• Assuming certain conditions are met by investors and the EIS companies (at the time of the investment and for a period of at least three years thereafter), money invested in an EIS qualifying company attracts the following headline benefits:
  • 30% upfront relief: Income tax relief is available at a maximum rate of 30% on EIS investments of up to £1 million in any tax year with further income tax relief being available on investments of up to an additional £1 million in any tax year in respect of knowledge-intensive companies. 30% of the amount invested can be claimed back against income tax
  • No capital gains tax paid on growth: EIS companies have the potential to grow significantly in value, sometimes to multiples of the initial amount invested. This growth is returned tax free, which can represent a material benefit.
  • Relief on losses: when an EIS company fails, the realised loss (net of any 30% income tax relief retained) can potentially be offset against income (as opposed to ‘normal’ losses arising on shares which are usually only available to offset against other capital gains) . This is a really important part of how the risk of investing in EIS companies is mitigated, and for additional rate tax payers can be worth an extra 31.5% of tax relief in addition to the 30% upfront income tax relief claimed.
• In the 2024 Autumn Budget, changes to the Business Property Relief (‘BPR’) rules were announced which will impact the IHT relief available from 6th April 2026 onwards. Whilst the relevant legislation has not yet been finalised and/or adopted, it was announced that after 6th April 2026, up to £2.5m of BPR-qualifying assets will qualify for 100% IHT relief, with any assets over this threshold qualifying for a 50% reduction in the rate of IHT payable.
• This is a simplified summary of EIS tax reliefs – click here for our detailed guide to EIS tax reliefs and how to claim them.

Adding EIS to your portfolio

• Considering investing in EIS with Parkwalk? Find out more about who we are and our current investments by clicking here.
• Investing with us is simple. We have funds open to new investors throughout the year. Once closed, we start to invest into new EIS qualifying companies on behalf of all investors in the fund.
• There are two types of EIS funds, an “EIS Fund” and a “Knowledge Intensive EIS Fund” – the underlying investments each makes are very similar, but there are some administrative differences. Click here to see the differences between these investment options.
• Click here to find out more about how to invest with us, and our investment timeline.
• Consider taking professional advice. This can be really helpful to ensure investors understand the investment and how it fits within a wider portfolio. An adviser can also make sure investors are maximising the benefit of the various tax reliefs available.

EIS Tax Reliefs Explained

Subject to certain conditions being met by the company and the investor at the time of the investment and for a minimum period thereafter, EIS investments can qualify for a range of tax reliefs. These are reliefs that the Government has put in place to mitigate some of the risks of investing into small, early stage companies, and to incentivise investment into the types of companies that have the potential to become important, sector defining businesses of the future.

Summary of five tax reliefs:

The following 3 reliefs are relevant to all EIS investors:

• 30% upfront relief: Income tax relief is available at a maximum rate of 30% on EIS investments of up to £1 million in any tax year with further income tax relief being available on investments of up to an additional £1 million in any tax year in respect of knowledge-intensive companies. 30% of the amount invested can be claimed back against income tax
• No capital gains tax paid on growth: EIS companies have the potential to grow significantly in value, sometimes to multiples of the initial amount invested. This growth is returned tax free, which can represent a material benefit.
• Relief on losses: when an EIS company fails, the realised loss (net of any 30% income tax relief retained) can potentially be offset against income (as opposed to ‘normal’ losses arising on shares which are usually only available to offset against other capital gains) . This is a really important part of how the risk of investing in EIS companies is mitigated, and for additional rate tax payers can be worth an extra 31.5% of tax relief in addition to the 30% upfront income tax relief claimed.

There are 2 additional benefits that can be relevant to some investors, depending on personal circumstances:

• Inheritance tax relief: Shares can be left free from inheritance tax provided they have been held for at least two years at time of death.
• Capital gains deferral: capital gains realised on other assets during the three years prior to investment or one year following investment can be deferred.

Detailed information about each relief:

1. Income Tax Relief

Subject to the annual maximum, income tax relief is potentially available at a maximum rate of 30% on EIS investments. Investing in EIS qualifying shares entitles the investor to a 30% reduction against their income tax bill. So a £100,000 investment entitles the investor to a £30,000 saving on their income tax bill.

• EIS reliefs are claimed on an investment-by-investment basis with the relevant dates being the date that the shares in the EIS company are actually issued, as opposed to the date of subscription to the Fund;
• The value of relief is 30% of the amount subscribed for shares in EIS companies no matter the effective rate of tax paid. But investors do need to have a sufficient income tax liability to cover the relief – it cannot create a negative tax liability;
• 30% income tax relief is available on EIS investments of up to £1 million in any tax year with further income tax relief being available on investments of up to an additional £1 million in any tax year in respect of ‘knowledge-intensive companies’. Click through to Section D to learn about KICS.
• Subject to the annual maximum, it may be possible for part or all of this tax relief to be carried back to the previous tax year;
• EIS shares must be held for a minimum period, of at least three years. If sold or otherwise disposed of during this period, some or all of the income tax claimed will be withdrawn and the shares may then be subject to capital gains tax. The same applies if a company ceases to qualify within three years. If an EIS company goes into administration within three years, income tax claimed should not normally need to be repaid (to the extent that there are no proceeds).

To understand how to claim income tax relief, please click through to Section C.

If you would like to read HMRC’s guide to claiming income tax relief for EIS qualifying investments, please click here.

2. Capital Gains Tax (CGT) free growth

As a UK taxpayer, when an investor sells shares at a profit, capital gains tax is usually payable at their marginal rate after deduction of the capital gains tax ‘annual exemption’. Depending on their personal circumstances this can be either 18% or 24%. Shares that qualify for EIS relief (and where EIS income tax relief has been claimed and not withdrawn) do not attract CGT, therefore on a profitable exit, no CGT needs to be paid from the proceeds received. This is sometimes referred to as Disposal Relief. For very successful companies that grow to be worth many multiples of the amount invested, this can be a significant benefit.

To qualify for this relief, shares have to have been held for a minimum of 3 years prior to sale, and must have met the qualifying conditions during this time. As mentioned above, Income Tax relief must also have been claimed in respect of the investment.

If you would like to read HMRC’s guide to CGT free growth (called disposal relief here) for EIS qualifying investments, please click here.

3. Relief for losses

If a company fails or is exited, an investor’s shares are sold at a loss and they can offset the loss against their tax bill. For there to be a loss, the company must have been sold for less than the “effective cost”. This is the amount invested in that company less the income tax the investor claimed in respect of it. For example, if someone invested £10,000 in a company and claimed income tax relief of £3,000, a loss will arise if proceeds from the sale of the company are less than £7,000 (their effective cost).

The amount of loss one can claim will be the difference between their effective cost, and the proceeds they receive. Alternatively, a company may fall to £nil value, which can entitle a ‘negligible value’ loss claim to be made.

Investors can choose whether to claim the effective loss against capital gains, or income tax. It is often beneficial to claim against income tax, and they can do so in respect of the year the loss has arisen, or the previous year.

An additional-rate taxpayer that offsets the loss on a company that falls in value to £0 could benefit from an extra 31.5% tax relief. In total, the initial 30% income tax relief plus the additional loss relief could effectively reduce a net loss per £1 invested to 38.5p.

Alternatively, investors can claim the loss against any capital gains tax bill for the current year, or future years on a roll forwards basis.

To understand when loss relief can be claimed, and how to make a claim, please click through to Section F.

HS286 Negligible value claims and Income Tax losses on disposals of shares you have subscribed for in qualifying trading companies (2025) – GOV.UK

4. Inheritance Tax Relief

As announced in the 2024 Budget and as updated on 23 December 2025, shares in EIS qualifying companies also qualify for Business Property Relief, sometimes called Business Relief. From April 2026, it is proposed that individuals will have a £2.5 million Business Relief allowance, enabling them to leave qualifying assets (including unlisted EIS shares) worth up to £2.5m completely free from IHT when they die. To qualify for this relief, shares must have been held for at least 2 years when the investor passes away (assuming the shares aren’t ‘replacement business property’, in which case the shares should be free from IHT from the date of investment).

If shares (or other qualifying assets) are worth more than £2.5 million are held at death, the excess value benefits from 50% relief from inheritance tax. As inheritance tax is typically charged at 40% of the value of the estate in excess of the nil rate bands, this can save the estate 40% (20% for assets above £1 million).

It is also proposed that shares listed on the Alternative Investment Market (AIM) and other junior markets which are not designated as ‘recognised stock exchanges’ such as Aquis, will in all circumstances only obtain relief at 50% rather than the current 100%.

Business Relief for Inheritance Tax: Overview – GOV.UK

Inheritance tax reliefs threshold to rise to £2.5m for farmers and businesses – GOV.UK

5. Capital Gains Tax (CGT) deferral relief

If an investor realises a capital gain on the disposal of other assets they own, CGT will typically be payable during the following tax year. However, if capital equivalent to the gain is invested into EIS shares and a relevant claim is made, that gain can be deferred over the life of the EIS investment.

To qualify for deferral relief, it is the value of the gain that needs to be reinvested. This will be a lower amount than the proceeds received on the disposal. For example, if another asset was sold for £100,000 and cost £60,000, the value of the gain is £40,000 – investing £40,000 into EIS qualifying shares in the relevant window could defer the CGT payable on this gain.

To defer the tax due on a disposal, the investment into EIS-qualifying shares needs to be within three years of the disposal giving rise to the capital gain. Alternatively, an EIS investment can be made up to 12 months prior to the disposal giving rise to the capital gain.

The gain will be deferred until the earliest of the following:

• The EIS shares are sold
• The company stops being EIS-qualifying within three years of investment
• The investor stops being a UK resident within three years of investment

When the deferred gain comes back into charge, capital gains tax will be payable on it at the relevant rate at that time. A gain can be deferred again if it’s reinvested into a new EIS-qualifying investment.

If the investor dies before the gain returns to charge, it will be eliminated.

Unlike the limits for claiming EIS income tax relief, there’s no maximum value limiting the amount of gains that can be deferred in this way.

To understand how to claim CGT Deferral Relief, please click through to Section C.

If you would like to read HMRC’s guide to deferring gains released elsewhere through investment in EIS qualifying shares, please click here (you’ll need to scroll down as the first half covers EIS disposal relief).

The amount and timing of these reliefs will depend on the individual circumstances of each investor and may be subject to change in the future. Investors are strongly recommended to seek independent professional advice on the tax consequences of acquiring, holding and disposing of shares in EIS companies.

How to Invest With Parkwalk

We recommend that investors seek professional advice if they are not experienced at making their own investments. Financial and/or tax advice can be valuable to ensure they understand the investment and how it fits within their overall portfolio, and to ensure they benefit fully from the tax reliefs available.

When someone decides to invest with us, the process is straightforward:

1: Submit an application for our EIS Fund

• Complete the application form and transfer funds to the relevant bank account – details can be found on the application form

2: Making An Investment

1. When someone invests in our Opportunities EIS Fund, we will target full deployment within 12-18 months of the date the application is accepted. It can be two to three months until the first investment is made.
2. When someone invests in our Knowledge Intensive Funds or our University Funds, we will start to invest the money once the fund closes. This should take 12-18 months within our Knowledge Intensive Funds and 12-24 months within our University Funds as we seek the right opportunities for the portfolio.
3. We will invest in shares expected to qualify for EIS relief based on the qualifying conditions.
4. On acceptance of an application, the investor and their designated adviser will receive a log-in to our portal, where they will be able to find details of their underlying investments, valuations, and correspondence relating to their investment including EIS certificates, contract notes, exit letters and biannual statements.

3: Certificates to claim relief

5. Investors will need an EIS certificate before they can claim any tax relief. This will be issued by Parkwalk as soon as it is available.
6. The type of certificate required depends on the type of fund one invests in:
   • An EIS Fund will issue investors with an EIS 3 certificate for each company in the Fund. These will be issued throughout the investment process, as soon as they are available. Typically this is 6-12 weeks after each investment is made.
   • A Knowledge Intensive Approved Fund will issue investors with an EIS 5 certificate for the Fund overall. This will be issued once the Fund is completely invested.

• The certificates are issued by HMRC to Parkwalk, so timings can vary. Investors should expect to receive a certificate around 2 months after the final investment is made. Typically this is 12-18 months after the Fund closes.
• We will upload each certificate to our portal as soon as it is available and notify the investor.

It is useful to remember that the relevant date for all EIS tax reliefs is not the date they subscribe to the Fund:

• For an EIS Fund, tax reliefs are based on the date that the EIS shares are issued by each EIS company;
• Subject to certain conditions being met, for a Knowledge Intensive Approved Fund, income tax relief is based on the date the Fund closes. All other reliefs are based on the date that the EIS shares are issued by each EIS company.

How to Claim EIS Tax Reliefs

When someone invests in EIS companies, they can claim up to 30% of the amount subscribed as income tax relief. They can apply to claim the relief against their income tax bill of the tax year the shares were issued, or the previous year. (Subject to certain conditions being met, for a Knowledge Intensive Fund, income tax relief is based on the date the Fund closes. All other reliefs are based on the date that the EIS shares are issued by each EIS company).

Investors need to have received a tax certificate in respect of their investment in order to make a claim. For single company investments or EIS portfolios, investors will receive an EIS 3 certificate in respect of each company they invest in. For a Knowledge Intensive Fund, they will receive an EIS 5 certificate in respect of their overall investment in the Fund. They should expect to wait some time after investment before receiving these certificates, as the manager will need to make the underlying investments on their behalf, and wait for HMRC to issue the relevant certificates.

We summarise how to claim EIS relief below:

A: Self Assessment Tax Return

Most investors claim relief as part of their annual self-assessment tax return. It is simple to include details of an EIS investment in the relevant section(s)

• In the “Tailor your return” section, there is a question asking about other tax reliefs – investors should answer “yes” which will create the page needed to include details of their EIS investments.
• In this “other tax relief and deductions” section, investors can enter the total amount of all EIS subscriptions for which they want to claim relief in that tax year. The details needed can be found on the EIS certificate(s).
• Provide investment specifics: Use the “Any other information” box in the final section of the tax return (box 19 on page TR 7 of the paper form equivalent) to list the UIR, company name, amount claimed, and date of issue for each investment.
• Investors won’t need to provide your certificates, but these are available on the portal if needed.

B: Submit a claim using a certificate

Another way to claim relief is to complete the claim form that is part of the EIS 3 or EIS5 certificates and send it to the HMRC tax office. This route can be useful if:

• The investor usually pays all of their tax via PAYE. This can reduce their monthly tax deductions for the year via a change to their tax code.
• If they want to claim Capital Gains Tax deferral relief as well as income tax relief (click here to read about CGT deferral relief)
• If they want to claim the tax relief against a previous year

Deadlines to claim income tax relief

Income tax relief must be claimed within five years from the 31 January following the tax year of investment in each underlying company (for an EIS Fund) or Fund close date for the Knowledge Intensive Fund.

This is not tax advice. You can read HMRC’s information about how to claim relief, or speak to your adviser. 

2. How to claim Capital Gains Tax Deferral Relief

Investors also need to have received their EIS certificates in order to claim Capital Gains Tax Deferral Relief.

They can select to add a supplementary section called “Capital Gains summary pages”. This section provides the space to detail the gains they would like to claim relief against.

Investors must complete the claim form attached to the EIS3 certificate they should receive from the company they have invested in, and attach the form to the Capital Gains Tax summary pages of their tax return.

Deadline

Investors cannot make a claim before they have received the relevant EIS3 certificate. The latest date for making a claim is 5 years after the first 31 January following the end of the tax year in which the EIS qualifying shares were issued.

3. How to claim Capital Gains free growth (“Disposal Relief”)

Subject to EIS income tax relief being claimed and not withdrawn, qualifying gains are automatically exempt from Capital Gains Tax. However, even if the gain is exempt, investors still need to report the disposal on their Capital Gains Tax summary pages if certain thresholds are met in the tax year. They must report the disposal if the total value of all assets sold, including the EIS shares, was over £50,000, or if the total chargeable gains (after deductions) exceeded the annual exempt amount (£3,000 for 2025-26).

Types of EIS Fund

There are two types of EIS Fund offered by specialist investment managers. We have compared them side by side using the details specific to our funds, however, these will be common across all EIS managers.

We have focused on differences between the two options for investors – in most aspects, the two ways to access portfolios of qualifying investments are very similar:

A Knowledge Intensive Fund is sometimes called an “Approved Fund”. This simply relates to the fact that HMRC must approve the Fund terms as qualifying for Knowledge Intensive Fund status. It does not confer any incremental guarantees.

In practice, the difference between the two types of fund can be limited to the timing of relief, as many non-Knowledge Intensive Funds also invest into “Knowledge Intensive Companies”.

Qualifying Criteria for EIS Relief

To claim, both the investor and the company must meet specific criteria:

Headline Investor Requirements:

• Be an individual taxpayer in the UK
• Not be connected to the company (with some limited exceptions)
• Invest in qualifying shares that are newly issued
• Hold the shares for a minimum of three years

If you would like to read more from HMRC, please click here.

Headline Company Requirements:

• Be an unquoted trading company
• Have fewer than 250 employees
• Gross assets must not exceed £15 million
• Must be carrying out a qualifying trade
• Must not be more than 7 years old

Recent UK Budget changes (effective April 2026) significantly increased Enterprise Investment Scheme (EIS) limits for companies, raising the annual investment limit to £10m (£20m for Knowledge Intensive Companies – KICs), doubling the lifetime limit to £24m (£40m for KICs), and increasing the gross assets threshold to £30m (£35m after share issue).

These requirements ensure that EIS qualifying investments are channelled towards those companies in the early years of their business, where capital can be harder to raise, and where growth and outcomes are far less certain, but can be very exciting.

If you would like to read more from HMRC, please click here.

When and how to claim Loss Relief

If a company is sold for a loss, or falls to be worthless, investors should be entitled to claim loss relief.

When: There are three times when loss relief can become relevant:

1. Company sold at a loss

If the company is sold more than three years after investment while still qualifying for relief, loss relief should be available. The amount of the loss takes into account the benefit of initial income tax claimed.

If the company is sold within three years, loss relief is still available, but income tax relief previously claimed will need to be repaid (and will not be relevant when calculating the extent of the loss) to the extent proceeds are received.

2. The company is shut down

If a company is voluntarily wound up for commercial reasons, loss relief should be available. This applies even if the company is wound up within three years of investment.

3. The company becomes worthless

If a company becomes worth nothing or very close to nothing, but is not wound up, no disposal has occurred. However, a loss relief claim may be able to be made if it is of “negligible value”. If you would like to understand more about this, please click here.

Loss relief and EIS portfolios

If someone invests in EIS shares through a managed portfolio or fund, they will hold multiple companies in one portfolio. For loss relief purposes, each company is a separate investment. This means that if any of the companies in the portfolio are sold at a loss, loss relief can be claimed. It doesn’t matter if the overall portfolio’s value is more than the amount invested.

How

If the investor completes a self-assessment tax return, they can claim EIS losses against either income tax or capital gains tax by completing the relevant part of the SA108 form.

Loss relief claimed through self-assessment may reduce the amount of tax one needs to pay for the relevant tax year. This can also be claimed retrospectively, so if too much income tax has been paid HMRC may issue a refund for the excess.

Time limits for making a claim

Income tax: one year from the 31 January after the tax year in which the loss was made.

Capital gains tax: four years after the end of the tax year in which the loss was made.

Parkwalk Advisors Limited (Parkwalk) is authorised and regulated by the Financial Conduct Authority: FRN 502237. Investments referred to in this news article are not suitable for all investors. Capital is at risk and investors may not get back the full amount invested. Any investment in a Parkwalk product must only be made on the basis of the terms of the full Information Memorandum. Tax treatment depends on the individual circumstances of each investor. Parkwalk is not able to provide advice as to the suitability of investing in any product. Past performance is not a reliable indicator of future results. This financial promotion was approved in January 2026.