The Enterprise Investment Scheme (EIS) is a programme designed to help companies raise money, which will then be reinvested into the business, helping it to grow. This is achieved by offering tax reliefs to any investors who purchase new shares in your company.
Through the scheme, your business is able to raise up to £5 million annually, and up to £12 million throughout the company’s lifetime.
What can the money be used for?
Any money which has been raised through the EIS must be used for a specific business activity as set out in the EIS regulations. These business activities are either:
1. A qualifying trade (the full list of which can be found here)
2. Capital raised to carry out a qualifying trade
3. Any research or development which will subsequently lead to a qualifying trade
Are there any other regulations on the use of this money?
As well as only being able to use money raised through the EIS for one of the above criteria, there are a number of other factors which must also be adhered to. These are:
1. Money must be spent within two years of the initial investment, or within two years of the date the company starts trading, whichever comes later
2. Money cannot be used to invest in another business or buy shares in another company
3. Money cannot be used in such a way that it poses a risk of the loss of capital for the investor
4. Money can only be used to develop, grow or add value to your business
What companies can benefit?
Although there are a number of rules and regulations for EIS, the vast majority of businesses can benefit from it. If your company is one of the following, then you are eligible for EIS, and it may well be worth investigating the scheme. Eligible parties must:
1. Have a permanent base in the UK
2. Not be trading on the stock market
3. Does not control another company, or is not controlled by another company
4. Does not expect to close after completing the projects EIS money has been raised for
These schemes can significantly help your business to flourish. We can help you through accountancy advice and solutions. For more information, please contact us today.