Introduction to the UK Enterprise Investment Scheme (EIS)

The UK Enterprise Investment Scheme (EIS) is a government initiative designed to help smaller, high-risk companies raise finance by offering tax relief to investors who purchase new shares in those companies.

Investors can enjoy up to 30% income tax relief on investments of up to £1 million per tax year. Additionally, there's no capital gains tax on profits if the shares are held for at least three years.

If the investment fails, investors can claim loss relief against their income tax. This means they can offset the loss against their income, effectively reducing their overall financial risk.

Since its inception in 1994, the EIS has helped over 30,000 companies raise more than £24 billion. Many of these companies are in sectors like tech and renewable energy, driving innovation and economic growth.

Interestingly, the EIS has attracted international investors due to its favorable terms. Over 20% of EIS investments come from non-UK residents, showcasing the scheme's global appeal.

The EIS was almost scrapped in its early years due to initial low uptake, but a surge in tech startups saved it from cancellation.