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FundingUpdated 2026-10-19

How much can I raise under EIS?

Quick Answer

A company can raise up to £10 million per year under EIS, with a lifetime maximum of £24 million from all venture capital schemes combined (for shares issued on or after 6 April 2026). Knowledge-intensive companies can raise up to £20 million per year with a £40 million lifetime cap.

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Detailed Explanation

EIS fundraising limits

The Enterprise Investment Scheme has separate limits for standard companies and knowledge-intensive companies (KICs).

Standard company limits (for shares issued on or after 6 April 2026)

- Annual limit

£10 million per year from all venture capital schemes (EIS, SEIS, VCTs, social investment) - **Lifetime limit

Knowledge-intensive company limits

- Annual limit

£20 million per year - **Lifetime limit

Company eligibility requirements

  • Fewer than **250 full-time equivalent employees** (500 for KICs)
  • Gross assets of no more than **£30 million** before the share issue (and no more than £35 million immediately after)
  • Must carry on a **qualifying trade**
  • Must not be controlled by another company
  • Must have a **permanent establishment in the UK**
  • Must not be listed on a recognised stock exchange
  • Must not be in financial difficulty

Investor limits

  • Maximum of **£1 million** per tax year across all EIS investments
  • Increased to **£2 million** per tax year if the excess above £1 million is invested in knowledge-intensive companies
  • Married couples and civil partners each have their own allowance

Tax relief for investors

| Relief | Amount | |---|---| | Income tax relief | 30% of amount invested | | CGT deferral | 100% of gains reinvested into EIS shares | | CGT exemption | 100% on gains from EIS shares (after 3 years) | | Loss relief | Available at marginal income tax rate | | IHT relief | After 2 years via Business Property Relief |

Example

An investor puts £500,000 into an EIS-qualifying company: - Income tax relief: £150,000 (30% of £500,000) - If they defer a £500,000 capital gain: no CGT payable until EIS shares are disposed of - If held for 3+ years and sold at a profit: no CGT on the EIS shares themselves - If the company fails: loss relief at up to 45% on the net cost after income tax relief

Important: how SEIS and EIS interact

SEIS investment of up to £250,000 counts towards the lifetime total but is raised under separate rules. A typical funding journey is SEIS first (up to £250,000), then EIS for subsequent larger rounds. The 70% spend rule means at least 70% of SEIS money must be spent before raising EIS funds.

EIS sunset clause

EIS was originally due to expire in April 2025 but has been extended to 6 April 2035 following the Autumn Statement 2023. This gives long-term certainty for both companies and investors planning future fundraises.

Source: HMRC VCM10000 - EIS Manual

Real-World Examples

Early-Stage Tech Startup

A software company needs £3 million to scale its development team and marketing efforts. They successfully raise the entire amount via EIS investment in one tax year, leaving them with a further £7 million of EIS allowance for that year, should they require further funding. This does not affect SEIS allowances.

Expanding Biotech Firm

An AI startup is designated as a KIC (Knowledge Intensive Company) and receives £8 million in EIS funding in the 2026/27 tax year. They can raise a further £12 million via EIS in the same tax year without exceeding the £20 million annual limit for KICs.

Common Mistakes to Avoid

  • Assuming the lifetime limit is per investor rather than per company, leading to exceeding the permitted amount.
  • Forgetting to account for SEIS funding when calculating the remaining EIS allowance, as these are distinct schemes.
  • Incorrectly classifying the company as knowledge-intensive, leading to incorrect fundraising targets and potential compliance issues with HMRC.
  • Failing to track the cumulative amount raised through all venture capital schemes (EIS, SEIS, VCTs) against the lifetime allowance.

What happens if we exceed the EIS limits?

If you exceed the annual or lifetime EIS limits, any investment raised beyond the limits will not qualify for EIS tax relief for the investors, and the company may face penalties from HMRC. You may need to return the funds or restructure the investment.

How do I determine if my company qualifies as a Knowledge-Intensive Company (KIC)?

A company is generally considered a KIC if it spends a significant amount on research and development (R&D) or innovation. Specifically, at least 20% of operating costs must be spent on R&D in one of the three years prior to investment, or at least 15% on average over the three years prior. Specific tests apply, consult your accountant or HMRC guidance.

Does the EIS annual allowance reset each tax year?

Yes, the annual EIS allowance of £10 million (or £20 million for KICs) resets at the start of each tax year (6th April). However, the lifetime limit applies cumulatively across all years.

Are there any restrictions on how we can use the EIS funds?

Yes, the funds raised under EIS must be used for qualifying business activities aimed at growth and expansion. They cannot be used for acquiring another business (unless it's very small) or for non-qualifying trades like dealing in land, shares, or financial instruments. Specific usage rules apply, so careful planning is essential.

How does raising EIS funding impact corporation tax?

Raising EIS funding itself doesn't directly impact your corporation tax liability. However, the use of those funds to generate profit will obviously be subject to corporation tax at the prevailing rate (currently 25% for profits over £250,000).

Practical Tips

  • Maintain a detailed record of all funding received from venture capital schemes, clearly distinguishing between EIS, SEIS, and VCT investments to track your remaining allowances.
  • Before approaching investors, obtain advance assurance from HMRC that your company and the proposed investment qualify for EIS. This provides certainty for both you and your investors.
  • If you are close to the EIS lifetime limit, explore alternative funding options such as debt financing or grants, but be sure to check that these do not impact on EIS qualifying status.
  • When forecasting your funding needs, factor in potential delays or unexpected expenses, and build a buffer to avoid exceeding the EIS limits due to unforeseen circumstances. Review your forecasts regularly.

Related Questions

How much can I raise under SEIS?

A company can raise up to £250,000 in total under SEIS. Individual investors can invest up to £200,000 per tax year across all SEIS investments and receive 50% income tax relief.

What is the difference between SEIS and EIS?

SEIS offers 50% income tax relief on investments up to £200,000 in very early-stage companies (under 3 years, under £250k raised), while EIS offers 30% relief on up to £1 million in slightly larger companies (under 7 years, up to £10 million raised per year).

Has EIS been extended beyond 2025?

Yes. EIS was originally due to expire on 6 April 2025, but the UK government confirmed in the Autumn Statement 2023 that both EIS and VCT reliefs have been extended to 6 April 2035, providing a further 10 years of certainty.

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