The enterprise investment scheme (EIS) is a scheme that encourages individuals to invest money in shares issued by qualifying unquoted companies with a permanent establishment in the UK.

A subscription for eligible shares of a qualifying EIS company is a tax efficient investment for the individual. The investor can benefit from the following tax reliefs:

1. •

   income tax relief for the investor of up to 30% of the amount invested and disposals of EIS shares after three years may be free from CGT (see the Enterprise investment scheme tax relief guidance note)

2. •

   capital gains deferral relief allows investors disposing of any asset to defer gains against subscriptions in EIS shares (see the Enterprise investment scheme deferral relief guidance note)

3. •

   losses on EIS shares may be offset against taxable income (see the Losses on shares set against income guidance note)

4. •

   EIS investments should qualify for IHT business property relief after two years’ ownership (see the BPR overview guidance note)

This guidance note discusses the occasions that may result