Individuals invest directly in your company, the 'investee company' (or group if appropriate), in order to benefit from generous income tax and capital gains tax reliefs.

How to qualify for EIS

• The investee company must be unquoted at the time of the investment (there are special rules about subsequent listing). Aim companies count as unquoted for EIS.
• The company's (or group's if applicable) gross asset value must not exceed £7m immediately before investment and £8m immediately after.
• Investment must be a cash subscription for new ordinary shares that have no preferential rights.
• The company, or a qualifying subsidiary, must be trading wholly or mainly in the UK. The Finance Bill No 2 2010 contained provisions  whereby this condition will be replaced by one requiring that the issuing company only has to have a permanent establishment in the UK. It is expected that the operative date for the new rules will be sometime in early 2011.
• There is a limit of 50 full-time employees in qualifying companies (or a group if applicable).
• The funds raised must be used for qualifying activities within 24 months.
• A number of trades are specifically excluded from the scheme, such as property development, financial services, farming and hotels.
• The company must not be under the control of another company and is restricted to how it holds shares in subsidiaries.
• The aggregate amount of qualifying funds that can be raised under this scheme (together with funds raised from VCTs and under the Corporate Venturing Scheme) must not exceed £2m in any 12-month period.

Adrian Walton

Director of corporate tax
E: This e-mail address is being protected from spambots. You need JavaScript enabled to view it
T: 020 7131 4180

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