How to Claim EIS Tax Relief: Step-by-Step Guide for Investors

Last updated: April 2026

The Enterprise Investment Scheme offers investors four distinct types of tax relief: income tax relief, capital gains tax deferral, capital gains tax exemption on disposal, and loss relief if the company fails. Each type of relief has its own claiming process, its own forms, and its own deadlines.

Getting the claims right is essential. Income tax relief alone is worth 30% of your investment. CGT deferral can shelter gains of any size. Loss relief can recover up to 61.5% of your loss at the highest tax rates. Missing a deadline or filing the wrong form means losing relief you are entitled to.

This guide walks through every type of EIS relief claim, step by step, with the specific forms, boxes, deadlines, and worked examples you need.

The EIS3 certificate: where everything starts

Before you can claim any EIS relief, you need an EIS3 certificate from the company you invested in. This is the single most important document in the EIS process.

What is an EIS3?

The EIS3 is a certificate issued by the company confirming that you subscribed for qualifying EIS shares. It contains:

• The company's name and unique tax reference
• Your name and address
• The date the shares were issued
• The number and class of shares
• The amount you paid for the shares
• The date the company began to carry on its qualifying trade
• A unique certificate reference number

Without the EIS3, you cannot claim any relief. HMRC will not process a claim based on a share certificate, subscription agreement, or any other document.

How the company issues EIS3 certificates

The company follows this process:

1. Issues shares to investors. The investment is made and shares are allocated.
2. Begins trading (if not already trading). The company must be carrying on a qualifying trade before it can apply for compliance approval.
3. Waits at least 4 months. The company must have been trading for at least 4 months after the share issue (or 4 months after the investment was received, if later) before submitting the compliance statement.
4. Submits form EIS1 (compliance statement) to HMRC. This is the company's declaration that the shares meet all qualifying conditions.
5. HMRC reviews and approves. Processing takes 4 to 8 weeks.
6. HMRC authorises the company to issue EIS3 certificates. The company receives a letter with a unique authorisation reference.
7. Company issues EIS3 to each investor. This must be done within 30 days of receiving HMRC's authorisation.

How long does it take to receive your EIS3?

From the date you invest, the typical timeline is:

If the company was already trading when you invested, the minimum wait is approximately 6 months (4-month trading requirement + HMRC processing + certificate issue). For pre-revenue companies, it can take significantly longer because trading must begin within 2 years.

This is one of the most common frustrations with EIS. You make an investment in April, but you may not receive your EIS3 until the following year. Plan your tax affairs accordingly.

Claiming income tax relief

EIS income tax relief reduces your income tax bill by 30% of the amount you invested. If you invested £100,000, your income tax is reduced by £30,000. If you invested £1,000,000 (the annual maximum, or £2,000,000 for knowledge-intensive companies), the relief is £300,000 (or £600,000).

The relief is set against your total income tax liability for the year. It cannot reduce your tax below zero. If your income tax liability is less than the relief available, the excess is lost (it cannot be carried forward to future years, although it can be carried back to the previous year).

Method 1: Claim on your Self Assessment tax return

This is the standard method for most investors.

Step 1: Receive your EIS3 certificate from the company.

Step 2: Complete your Self Assessment tax return for the tax year in which the shares were issued.

Step 3: Enter the EIS relief in the "Other tax reliefs and deductions" section. The specific boxes are:

• SA100 (main return): Box 2 in the "Other tax reliefs" section on page TR 6
• If filing online: Navigate to "Other tax reliefs" and select "Enterprise Investment Scheme"
• Enter the amount invested (not the relief amount). HMRC calculates the 30% automatically.
• Enter the EIS3 certificate reference number

Step 4: Attach the EIS3 certificate if filing by paper. If filing online, keep the certificate for your records. HMRC may request it.

Step 5: Submit the return. The 30% relief will be applied against your tax liability.

Method 2: Claim before filing via form EIS1 (investor's claim)

If you do not want to wait until you file your Self Assessment return, you can submit a claim to HMRC directly using the investor's claim form.

Note: there are two forms called "EIS1." One is the company's compliance statement. The other is the investor's claim for relief. They are different forms. The investor's form is sometimes referred to as "form EIS1 (claim)" or is accessed through HMRC's online services.

Step 1: Receive your EIS3 certificate.

Step 2: Write to HMRC or use the online claim service. Include:

• Your name, address, and UTR (Unique Taxpayer Reference)
• The EIS3 certificate (or a copy)
• The tax year you want the relief applied to
• A statement that you are claiming EIS income tax relief

Step 3: HMRC processes the claim and adjusts your tax code or issues a repayment.

This method is useful if:

• You have already paid tax for the year through PAYE and want a refund
• Your Self Assessment return is not due for several months
• You want to adjust your tax code for the current year to reduce monthly PAYE deductions

Income tax relief limits

What income tax relief cannot do

The relief reduces your income tax liability. It does not reduce National Insurance, capital gains tax, or any other tax. If your total income tax liability for the year is £20,000 and your EIS relief is £30,000, you receive £20,000 of relief and the remaining £10,000 is lost (unless you carry back to the previous year, where the same principle applies).

Carrying back relief to the previous tax year

EIS income tax relief can be carried back to the previous tax year. This means an investment made in the 2026/27 tax year can be treated as if it were made in 2025/26, reducing your 2025/26 tax liability instead.

How carry-back works

Example: You invest £200,000 in EIS shares in July 2026 (tax year 2026/27). Your 2025/26 income tax liability was £80,000, and you have already paid it in full. Your 2026/27 income tax liability is expected to be £40,000.

Without carry-back: You claim £60,000 relief (30% of £200,000) against your 2026/27 liability of £40,000. You receive £40,000 of relief. The remaining £20,000 is lost.

With carry-back: You elect to carry back the full £200,000 investment to 2025/26. The £60,000 relief is set against your 2025/26 liability of £80,000. You receive a £60,000 repayment for 2025/26 (plus interest from the date tax was originally paid). Your 2026/27 liability remains £40,000.

You can also split the investment between years: carry back £100,000 to 2025/26 (£30,000 relief) and claim £100,000 in 2026/27 (£30,000 relief).

How to make a carry-back claim

Include the carry-back election on your Self Assessment return for the year the shares were issued. In the EIS section, indicate the amount you wish to carry back. Alternatively, write to HMRC separately if you want the relief applied before your return is due.

Carry-back deadlines

The carry-back claim must be made by the later of:

• The first anniversary of the 31 January filing deadline for the year of investment
• 5 years after the 31 January filing deadline for the year the shares were issued

In practice, you have plenty of time to make a carry-back claim. But the sooner you claim, the sooner you receive any repayment.

Claiming CGT deferral

CGT deferral allows you to postpone paying capital gains tax on a gain you have already made by investing the gain in EIS shares. The gain can be from any asset: property, shares, a business, or anything else subject to CGT.

Key rules for CGT deferral

Step-by-step claiming process

Step 1: Make a chargeable gain on an asset. For example, you sell a buy-to-let property in March 2026 and make a gain of £300,000.

Step 2: Invest in EIS shares. The investment must be made between 3 years before and 1 year after the gain arises. In this example, you invest £300,000 in EIS shares in August 2026.

Step 3: Obtain your EIS3 certificate from the company.

Step 4: Complete form EIS/CGT2 (Deferral of Capital Gain). This is a separate form from your Self Assessment return, although you can also include the claim on your return.

The form requires:

• Details of the original gain (date, amount, asset disposed of)
• Details of the EIS investment (company name, shares issued, amount, EIS3 reference)
• The amount of gain you wish to defer

Step 5: Submit form EIS/CGT2 to HMRC. You can submit it alongside your Self Assessment return or separately.

Step 6: HMRC processes the claim and the gain is deferred. You do not pay CGT on the deferred amount until the deferral event occurs.

When the deferred gain crystallises

The deferred gain becomes chargeable when any of these events occur:

• You sell the EIS shares
• You give the EIS shares away (other than to a spouse or civil partner)
• The company loses EIS qualifying status within 3 years
• You become non-UK resident within 3 years of the share issue

If you die while holding the EIS shares, the deferred gain is extinguished. It is never paid. This makes EIS deferral an important inheritance tax and estate planning tool.

Important: connected persons CAN claim deferral

Unlike income tax relief, CGT deferral is available to connected persons. A director who holds more than 30% of the company's shares cannot claim income tax relief, but can defer capital gains by investing in the company's EIS shares. This is a significant benefit for founders who sell assets and reinvest in their own companies.

Worked example: CGT deferral

Sarah sells shares in a listed company in January 2026, making a gain of £500,000. CGT at 24% would cost her £120,000 (using the 2025/26 higher rate for non-residential assets).

In June 2026, she invests £500,000 in EIS shares in a qualifying company. She receives her EIS3 certificate in January 2027.

She files form EIS/CGT2 with her 2025/26 Self Assessment return, claiming deferral of the £500,000 gain. The £120,000 CGT liability is deferred.

Five years later, she sells the EIS shares for £1,200,000. At that point:

• The deferred gain of £500,000 crystallises and becomes chargeable
• The EIS shares qualify for CGT exemption (held for more than 3 years), so the £700,000 gain on the EIS shares is exempt
• Net CGT position: £500,000 deferred gain is chargeable at the rate applicable in the year of disposal

Claiming CGT exemption on disposal

If you hold EIS shares for at least 3 years and claimed income tax relief on them, any gain on disposal is completely exempt from capital gains tax. This is a full exemption, not a deferral. The gain disappears.

Conditions for CGT exemption

How to claim

CGT exemption on EIS shares is automatic. When you report the disposal on your Self Assessment return, enter the gain and then claim the EIS exemption. The gain is reduced to zero.

If you are filing online, there is a specific section for claiming relief on disposal of EIS shares. Enter the details of the disposal and the EIS3 certificate reference. HMRC will apply the exemption.

Partial disposals

If you sell some of your EIS shares after 3 years and keep the rest, the exemption applies to the shares sold. The remaining shares continue to qualify for future exemption.

What if you sell before 3 years?

If you sell EIS shares before the 3-year holding period, two things happen:

1. The gain on disposal is chargeable to CGT (no exemption)
2. The income tax relief is clawed back in full

This makes early disposal extremely expensive. An investor who sells EIS shares after 2 years loses both the 30% income tax relief and the CGT exemption. Only sell before 3 years if absolutely necessary.

Claiming loss relief

If the company you invested in fails or its shares become worthless, you can claim loss relief. This allows you to set the loss against your income (not just against capital gains), providing relief at your marginal income tax rate.

How loss relief works

The loss is calculated as:

Net loss = Amount invested - Income tax relief received - Amount received on disposal (if any)

This net loss can be set against:

• Your income for the tax year in which the loss arises, or
• Your income for the previous tax year

The relief is at your marginal income tax rate: 20% (basic), 40% (higher), or 45% (additional).

Worked example: loss relief

James invested £100,000 in EIS shares and claimed £30,000 income tax relief (30%). The company fails and the shares are worthless.

Total recovery at 45% rate: £30,000 (income tax relief) + £31,500 (loss relief) = £61,500 recovered from a £100,000 total loss. The effective cost of the total loss is just £38,500.

Total recovery at 20% rate: £30,000 (income tax relief) + £14,000 (loss relief) = £44,000. The effective cost is £56,000.

This is one of the most powerful aspects of EIS. Even if the company fails completely, the investor's maximum downside is significantly reduced.

How to claim loss relief

Step 1: Establish that a loss has occurred. This can be through:

• A formal liquidation of the company
• HMRC agreeing that the shares are of negligible value (via a negligible value claim)
• A sale of the shares for less than the amount invested

Step 2: Calculate the net loss (amount invested minus income tax relief minus any proceeds).

Step 3: Claim the loss on your Self Assessment return. The loss is entered in the capital gains section, with a note that you are electing to set it against income under Section 131 ITA 2007.

Step 4: Specify which tax year you want the loss set against: the year the loss arises, or the previous year.

Negligible value claims

If the company has not formally been wound up but is clearly worthless (no assets, no trading activity, struck off the register), you can make a negligible value claim. This treats the shares as if they were sold for nothing, crystallising the loss. Submit the claim on your Self Assessment return or write to HMRC.

Timing rules: when shares must be issued

EIS has strict timing rules that affect when relief can be claimed.

Share issue date

The shares must be issued in the tax year for which you are claiming relief (or the previous year, if using carry-back). The share issue date is the date the company formally allots the shares, not the date you signed the subscription agreement or transferred the money.

Trading commencement

The company must begin trading within 2 years of the share issue. If it does not, the shares are not qualifying and no relief is available.

Money must be spent within 2 years

The money raised from the EIS share issue must be employed for the qualifying business activity within 2 years of the share issue (or 2 years of the commencement of trade, if later). If the money is not used within this window, the shares may lose qualifying status.

Connection between share issue and investment timing

The investment must be genuinely made at or around the time the shares are issued. Advance subscription agreements (where money is paid months before shares are issued) are common, but the share issue date determines the tax year for relief purposes.

What records to keep

HMRC can enquire into EIS claims for up to 4 years after the end of the tax year in which the claim was made (longer if there is carelessness or fraud). Keep the following records for at least 6 years.

Complete worked example: all four types of relief

David makes a £200,000 EIS investment in January 2026. Here is how each relief applies over the life of the investment.

Year 1: Income tax relief

David's income tax liability for 2025/26 is £90,000. He claims 30% income tax relief on £200,000 = £60,000. His tax liability reduces to £30,000. He receives a £60,000 repayment if tax was already paid via PAYE.

Year 1: CGT deferral

David sold a rental property in March 2025 and made a £150,000 gain. He defers the full £150,000 by submitting form EIS/CGT2. The CGT that would have been due (£36,000 at 24%) is postponed.

Year 4: CGT exemption on disposal

In March 2029 (3 years and 2 months after the share issue), the EIS company is acquired. David's shares are worth £600,000. The gain of £400,000 (£600,000 minus £200,000 cost) is fully exempt from CGT because he held for more than 3 years and claimed income tax relief.

However, the £150,000 deferred gain from the property sale now crystallises. David pays CGT on £150,000 at the rate applicable in 2028/29.

Summary of David's EIS investment

Alternative scenario: company fails

If the company had failed instead, David's position would be:

Even with a total loss and the deferred CGT crystallising, David's maximum downside on a £200,000 investment is £113,000 (56.5% of the investment), assuming he is an additional rate taxpayer.

Common claiming mistakes

Mistake 1: Claiming before receiving the EIS3

Do not include EIS relief on your Self Assessment return until you have the EIS3 certificate. HMRC will reject the claim and may delay processing your entire return. If the EIS3 has not arrived by the time your return is due, file without the claim and amend later when the certificate arrives.

Mistake 2: Forgetting to claim CGT deferral separately

Income tax relief is claimed on your Self Assessment return. CGT deferral is claimed on form EIS/CGT2. These are separate claims. Claiming income tax relief does not automatically defer your capital gains. You must submit both claims.

Mistake 3: Missing the carry-back opportunity

If your income tax liability is insufficient to absorb the full 30% relief in the year of investment, consider carrying back to the previous year. Many investors forget this option and lose relief permanently.

Mistake 4: Selling shares before 3 years

Selling before the 3-year holding period triggers a clawback of income tax relief and loss of CGT exemption. The cost of early disposal is severe. If you need liquidity, explore other options before selling EIS shares within the first 3 years.

Mistake 5: Not making a negligible value claim

If the company is clearly worthless but has not been formally wound up, you can still claim loss relief by making a negligible value claim. Many investors wait years for a formal liquidation when they could claim the relief immediately.

Mistake 6: Failing to track deferred gains

CGT deferral can span decades. Keep clear records of all deferred gains, the EIS shares they relate to, and the dates involved. When you eventually dispose of the EIS shares, you need to report the crystallised deferred gain accurately.

Frequently asked questions

How long do I have to claim EIS income tax relief?

You must claim within 5 years of the 31 January filing deadline for the tax year in which the shares were issued. For shares issued in the 2025/26 tax year (filing deadline 31 January 2027), the claim deadline is 31 January 2032. This gives you substantial time, but do not delay unnecessarily, as you are missing out on the benefit of the relief in the interim.

Can I claim EIS relief if I am not registered for Self Assessment?

You can submit form EIS1 (investor's claim) to HMRC without being registered for Self Assessment, but this is unusual. Most investors with sufficient income to benefit from EIS are already in Self Assessment. If you are employed and pay all your tax through PAYE, HMRC can adjust your tax code to give you the relief. Contact HMRC's helpline with your EIS3 certificate.

What happens if I invest more than £1 million in EIS shares in one year?

The maximum investment qualifying for income tax relief is £1 million per tax year (£2 million if at least £1 million is invested in knowledge-intensive companies). If you invest more than this, the excess does not qualify for income tax relief. However, CGT deferral has no annual limit, so you can defer gains by investing any amount in EIS shares.

Can I claim EIS relief and put the shares in an ISA?

No. EIS shares cannot be held in an ISA. They are separate tax-advantaged investments. You cannot combine EIS relief with ISA tax benefits on the same shares.

What if the company issues my EIS3 late?

If the company delays issuing your EIS3 (which is common), you can still claim relief. File your Self Assessment return without the EIS claim, then amend the return when you receive the EIS3. Alternatively, make a standalone claim to HMRC. There is no penalty to you for late receipt of the EIS3, as the 5-year claim window is generous.

Can I transfer my EIS shares to my spouse and keep the relief?

Transferring shares to a spouse or civil partner is not a disposal for CGT purposes, so it does not trigger clawback of income tax relief or crystallise a deferred gain. However, the transferred shares retain their EIS status in the hands of the spouse. The income tax relief remains with the original investor (it is not transferred). If the spouse subsequently sells the shares, the CGT exemption applies if the combined holding period (both spouses) exceeds 3 years.

Do I need to report EIS shares on my Self Assessment every year?

You only need to report EIS on your Self Assessment return when you are claiming relief (the year of investment, or the year of carry-back) and when you dispose of the shares. You do not need to report that you hold EIS shares in intervening years.

Can an executor claim EIS relief on behalf of a deceased investor?

Yes. If an investor dies before claiming EIS relief they were entitled to, the executor can make the claim on their behalf. If the investor dies while holding EIS shares with deferred gains, the deferred gains are extinguished. The shares pass to the estate at market value, and any gain on subsequent disposal by the beneficiary is measured from that market value.

Further reading

For a full overview of the Enterprise Investment Scheme covering company and investor perspectives, read the Enterprise Investment Scheme: Complete Guide for UK Companies.

For details on which companies qualify for EIS and how to apply for advance assurance, read EIS Qualifying Companies: Who Can Use the Enterprise Investment Scheme?.