If you’re looking for information about EIS investments and their benefits, here’s a quick overview to help you understand why they were introduced, and some of the key EIS benefits available to potential investors.
EIS investments – boosting businesses
The UK government introduced EIS investments in 1994, building a range of tax benefits into the scheme to encourage investors to shore up new small businesses by becoming shareholders.
To make EIS investments work, businesses must be identified as having high-growth potential – and some types of business are exempt from participation. The idea is, that with early investment, these companies will grow and mature at a faster pace, subsequently paying into the treasury to support the economy, while also providing employment opportunities – both of which will increase as the business enjoys further success.
It’s prudent to state straight off the bat that EIS investments aren’t for everyone. While there are plenty of benefits, which we explain below, there are risks to consider with your personal circumstances too. Our Beginner’s Guide to the Enterprise Investment Scheme looks into these details a little more closely, but as with any plan to add to your portfolio, you should always seek expert advice before you make any decisions.
EIS investments from launch
EIS investments – latest figures
The latest government statistics show that in the period of 20/21, 3,755 UK businesses received £1,658 million in EIS investments – £358 million of which was raised by 1,370 new companies to the scheme. The global Covid pandemic had an obvious impact during this period, but confidence has returned and investments have taken an upturn in more recent times.
London and the South East of England were the areas drawing the most investment, at a substantial 65%, and as has become expected during the course of the scheme, the information and communication sector is the biggest participant overall.
Since the scheme’s inception, official figures show that nearly 33,000 companies have received approximately £24billion in investments in total.
EIS benefits are designed to provide attractive tax relief gains, cushioning associated risks and encouraging investors to support SMEs in their quest for raising finance.
EIS investors are eligible for the following tax reliefs:
Additional EIS Benefits
While it’s clear that for any investor money is the bottom line, there are some other less tangible benefits that come hand-in-hand with EIS investments…
Accelerated Business and Investment Growth
Being part of something big from the beginning is always a nice feeling, and with EIS investments, you’re helping small business with big plans for growth and success to take the next step. While there’s no guarantee of their journey’s outcome, there’s a sense of confidence that comes with knowing the shares you’re buying are backing owners with energy, drive and commitment.
Encouraging the Economy
By the nature of the types of businesses usually seeking involvement in the scheme, your investment will be in support of future-thinking companies that are focused on innovation. They’re the thinkers of today and the big employers of tomorrow – as they grow, so does our economy with them.
Diversifying and Complementing
While EIS investments are no replacement for more stable long-term options such as a pension, they can be used to complement your existing portfolio – while adding some diversification at the same time.
Getting the right balance in your portfolio is key, and EIS investments can be a great addition to your current interests providing you understand the risks benefits you’ll be able to access according to your personal circumstances.
If you’d like to speak to an EIS investment expert, please drop us a line and we’ll be happy to discuss how the available EIS benefits might apply to you.