Enterprise Investment Scheme

IW Capital is a leading private investment house facilitating both debt and equity investment into the UK’s high-quality community of growing SMEs

Find out how EIS can support your investment strategy

FIND OUT HOW IW CAPITAL’S TAX-EFFICIENT INVESTMENT AND SME LENDING OPPORTUNITIES CAN SUPPORT YOUR FINANCIAL STRATEGY

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IW Capital offers both debt and equity investment opportunities (through the Enterprise Investment Scheme) and senior debt lending opportunities in growing UK companies.

IW Capital focuses on originating, structuring, managing and leading tax-efficient investment and senior debt opportunities for our expansive network of high net-worth individuals, ultra-high net-worth individuals, family offices, wealth managers and IFAs. With an executive team boasting over 50 years collective experience in SME investment, IW Capital is renowned for its leading expertise in tax-efficient equity investment through EIS investments and providing debt funding to SMEs. Our company portfolio is sector agnostic, and we take an active interest in managing investor interest through the regular provision of in-depth company reports and market updates.

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Understanding the Enterprise Investment Scheme

What is EIS?

The Enterprise Investment Scheme, or EIS was developed by the government and launched in 1994 in order to incentivise investors to to make a tax efficient investment in new or young companies that could be considered high risk. These companies often do not have the capital to be able to operate and grow without outside assistance. EIS allows them to remain in control of their businesses and achieve a profit while remaining in control of their capital.

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How will it benefit investors?

Making a tax efficient investment in a EIS business comes with a number of benefits for investors. First of all, investors get a 30% income tax relief on all EIS investments up to £1 million or £2 million for knowledge intensive businesses.

Secondly, investors are not required to pay capital gains tax on any profit made after the profit of those shares and any previous capital gains can be deferred, this is the reason the Enterprise Investment Scheme is often referred to as a tax efficient investment.

The Enterprise Investment Scheme also takes steps to minimise risk for investors through loss relief. If shares are disposed of at a loss, the amount of the loss, less income tax relief given, can be set against income on the year in which they were disposed of, or income on the previous year instead of being set against any capital gains.

Carry back is also possible on all, or part of the investment to the preceding tax year if the limit for relief has already been exceeded.

What are the stipulations for businesses?

In order for a small or medium company to be eligible for the EIS scheme they must have fewer than 260 full time staff and cannot have gross assets worth over £15 million before the issue of shares or £16 million immediately after.

The company must also be established in the UK but cannot be trading on any existing stock exchange as the scheme is for businesses that are not already receiving additional funding.

What are the rules for investors?

In order for investors to be able to benefit from EIS they cannot invest more than £1 million in a business, unless it’s a knowledge intensive business. Investors must invest over 3 years and can only invest in up to 30% of the business.

Additional support for Knowledge intensive businesses 

EIS investments are aimed at targeting innovative and potentially high risk SMEs across a range of new age sectors in order to bring investments where they are needed most. In order to qualify as knowledge intensive, a business must meet certain criteria. A knowledge intensive business must have at least 10% of the operating costs dedicated to research and development consistently for the past 3 years, with it rising to 15% for at least one of those years.

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A knowledge intensive business must also have a desire to raise more than £12 million over its lifetime and cannot have received any finance from another venture capital scheme in the past 7 years.

The final stipulation for a knowledge intensive business is that it must fall in to one of the two following categories:

It must either be classed as an innovation business or a skilled employee business.

In order to qualify as “innovation” the business must either be creating or preparing to create an intellectual property that will go on to form a majority of their business.

The business could also qualify as a “skilled employee” business if at least 20% of the employees have a higher education degree and are directly involved in the research and development sector of the business.

A knowledge intensive business is eligible to receive twice as much capital from a single investor than most Enterprise Investment Scheme businesses, up to £2 million.

How has the Enterprise Investment Scheme benefitted companies? 

Companies in the information and communication and the professional, scientific and technological spaces received over £500 million in EIS funding in 2015 – 2016 according to HMRC.

Energy technology was also a large beneficiary of EIS with £282 million invested within 115 companies in the electricity, gas, steam and air conditioning sectors in the 2015 – 2016 period.

Overall the Enterprise Investment Scheme has helped almost 30,000 companies since its inception in 1993, raising £16.2 billion in investments.

Please read this important information. By selecting I AGREE this indicates that you have read and understand the terms and conditions as set out below, before accessing the rest of this website.

The information on this website may not be suitable for all investors and we therefore need to ensure that you are sufficiently aware of the risks and are of a suitable category as defined by the Financial Services and Markets Act 2000. The information given on this website is directed only at persons in the UK and is not to be construed as advice relating to legal, taxation or investment matters and prospective investors are strongly recommended to seek their own personal investment or taxation advice from either their Stockbroker, Bank Manager, Solicitor, Accountant, Independent Financial Adviser or other professional adviser, who should be authorised under the Financial Services and Markets Act 2000.

Retail Clients (as defined in the rules of the Financial Conduct Authority) should seek the assistance of a Financial Adviser. IW Capital Limited will be treating you as a 'sophisticated' customer who is experienced in unquoted investments, understands the risks involved and understands that this may expose you to a significant risk of losing all of the money invested

Website: The information set out in this website does not constitute or form part of any offer to issue or sell, or any solicitation of an offer to subscribe or purchase any investment, nor shall it or the fact of its distribution form the basis of, or be relied on in connection with any contract.

No representation, warranty, or undertaking, express or limited, is given as to the accuracy or completeness of the information or opinions contained in this document by IW Capital Limited or any of its officers, employees or associates and no liability is accepted by such persons for the accuracy or completeness of any such information or opinions. As such, no reliance may be placed for any purpose on the information and opinions set out on this website.

Past performance is no guarantee of future performance. The value of shares in any investee companies may go down as well as up and Investors may not get back the full amount invested. Investors should not consider investing unless they can afford a total loss of their investment. Investments in unquoted shares carry higher risks than investments in quoted shares and involve a degree of risk as well as the opportunity of reward.

Investee companies may often be relatively small and highly dependent on the skills of a small group of key executives. Investments may often be especially vulnerable to changes in technology, government actions, changes in statute and competitive pressures. In particular, there may be changes to the EIS legislation which may affect Investor's tax positions.

The tax reliefs referred to on this website are those currently applying or expected to apply. However, Investors should be aware that tax reliefs can change. Their applicability and value will depend upon the individual circumstances of a given Investor, and Investors should seek their own independent professional advice on their particular tax situation and the application of such tax reliefs prior to making any investment. Whilst many of the investments set out on this website may qualify for EIS and other tax advantageous breaks, there is no guarantee that EIS status or other tax efficient status can be maintained throughout the life of the investment. Both investee companies and Investors need to comply with the requirements of the EIS legislation in order to maintain EIS Relief and non-compliance may result in the loss or partial claw-back of EIS Relief and potential interest penalties.

IW Capital is a Company registered in England and Wales 07427824 at 42 Bruton Place, London, W1J 6PA.

IW Capital Limited is an Appointed Representative of Sapia Partners LLP which is authorised and regulated by the Financial Conduct Autority (with the Firm Reference Number 550103).