EIS—conditions for relief: issued shares, the funds raised and the arrangements in general
EIS—conditions for relief: issued shares, the funds raised and the arrangements in general

The following Tax guidance note provides comprehensive and up to date legal information covering:

  • EIS—conditions for relief: issued shares, the funds raised and the arrangements in general
  • Conditions relating to shares
  • Conditions relating to funds raised
  • Conditions relating to the arrangements in general
  • Meaning of qualifying business activity
  • Meaning of Knowledge Intensive Company

The Enterprise Investment Scheme (EIS) is designed to encourage investment in smaller, higher-risk trading companies by offering a range of tax reliefs to individual investors purchasing newly issued shares in those companies.

The EIS regime is prescriptive and sets out numerous requirements that must be met, including in relation to:

  1. the individual investors

  2. the issuing company, and

  3. the issued shares, the funds raised and the arrangements in general

This Practice Note focuses on the conditions that must be met in relation to the issued shares, the purpose of the issue of shares, and the amount and use of the money raised. These conditions are described in the context of the income tax relief provided for in Part 5 of the Income Tax Act 2007 (ITA 2007). References to the corresponding capital gains tax (CGT) rules are also provided where relevant.

For details of the other conditions see Practice Notes:

  1. EIS—conditions for relief: individual investor conditions

  2. EIS—conditions for relief: issuing company, and

  3. EIS—conditions for relief: qualifying trades

For an explanation of the various tax reliefs available to qualifying EIS investors, see Practice Notes: EIS—introduction to regime and description of tax reliefs and EIS—circumstances in which relief is withdrawn or reduced.

Conditions relating to shares

The shares issued to the individual investor seeking EIS relief must:

  1. be issued prior to 6 April 2025

  2. be 'ordinary shares'—meaning