EIS funds
EIS funds

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

  • EIS funds
  • EIS rules in relation to nominees
  • Nominee EIS fund structure
  • Alternative EIS fund structure—no nominee, no HMRC approval
  • HMRC approval
  • Claiming EIS relief
  • Tax treatment of fund management fees

FORTHCOMING CHANGES: Following the Patient Capital Review in 2017, the government published a consultation on 13 March 2018 on the introduction of a new knowledge intensive EIS fund structure. The aim was to provide the companies invested in with longer term capital. For more detail, see News Analysis: Spring Statement 2018—Tax analysis—Enterprise Investment Scheme knowledge-intensive fund consultation, Government consultation on new fund for knowledge-intensive companies and EIS knowledge intensive fund consultation—Tax Journal, Issue 1401, 16.

In its 29 October 2018 budget statement, the government announced that following that consultation, revised legislation would be pre-published in summer 2019, to take effect from 6 April 2020, regarding approved knowledge-intensive investment funds for the purposes of the EIS scheme.

On 11 July 2019, further details were released of draft legislation amending section 251 of Income Tax Act 2007 (ITA 2007) with effect from 6 April 2020. Section 251 is the legislation currently dealing with ‘approved investment funds’ for EIS purposes. The new draft legislation is expected to appear in Finance Bill 2019–20. It limits the arrangements for approved EIS funds to so-called ‘approved knowledge-intensive funds’. This concept is defined in new s 251(1A) of ITA 2007, as a fund established for the purpose of investing ‘wholly or mainly, or substantially wholly in shares in companies which are knowledge-intensive companies at the time the shares are issued’