Our Step by Step EIS Guide

Here we present an easy-to-follow guide to investing in an EIS-qualifying opportunity.

1: Make sure you're eligible to claim EIS tax relief

If you are a UK tax payer, then you should be able to claim EIS tax relief. However, it is always advisable to seek professional tax advice, particularly if you have complex financial affairs.

2: Find an eligible investment opportunity

To claim tax relief under the Enterprise Investment Scheme, you need to invest in an EIS-qualifying opportunity. There are a huge number of potential sources of suitable deals, but before you invest, you need to check whether the company raising money has EIS Advance Assurance from HMRC. If it does, then it is likely (though not guaranteed) that EIS will be granted on completion of the fundraise, and that you will be able to claim tax relief, subject to your own tax situation.

If the company DOESN'T have EIS Advance Assurance, then check whether it is in the process of applying for this. Sometimes companies will begin to raise money before they have confirmed EIS eligibility with HRMC. You can assess whether the company is likely to gain Advance Assurance yourself, by checking against a list of criteria. The company must:

• Be established in the UK
• Not trading on a recognised stock exchange at the time of the share issue and is not planning to do so (also known as an unquoted company)
• Not control another company other than qualifying subsidiaries
• Not be controlled by another company or not have more than 50% of its shares owned by another company
• Not have gross assets worth more than £15 million before any shares are issued and not more than £16 million immediately afterwards
• Have fewer than 250 full-time equivalent employees at the time the shares are issued
• Carry out a qualifying trade

If you're confident that the business in which you want to invest is likely to qualify for EIS, then you can go ahead and pledge.

3: Await your EIS certificate

Once you have invested and received confirmation of your capital commitment, you can await your offical EIS certificate (EIS3). The company is required to submit a full application (EIS1) to HMRC on completion of the fundraise. Once the application has been processed, HMRC will issue individual EIS3 certificates for each shareholder. It is the responsibility of the fundraiser (e.g. crowdfunding platform, angel syndicate, etc.) to then issue these to each shareholder. You will most likely receive this through the post, though some platforms (e.g. Seedrs) are now issuing these electronically only.

4: Claim your tax relief

Once you have your EIS3 certificate, you can claim the associated income tax relief by:

• Retain page one of the form
• Update your address if required using a covering letter
• Complete pages three and four of the form, you can choose to claim tax relief in the current tax year or the preceding year
• Send to your HMRC Office for processing