EIS Practice
EMV Capital Evergreen EIS Fund
EMV is a specialist technology investor building high conviction stakes in IP-rich, early-stage businesses with a focus on DeepTech, Life Sciences and Sustainability. The EMV Capital EIS Fund is designed to provide investors with exposure to a diversified portfolio of high growth companies, while benefiting from EIS tax relief. The Fund is an evergreen vehicle, aiming to invest in a portfolio of eight companies at seed/Series A within a 12-month period.
| Key Information | Details |
| Open Date | Evergreen (open all year round) |
| Minimum Subscription | £25,000 |
| Tax Relief Available | Yes, EIS3s provided on a deal-by-deal basis |
| Target Deployment | Full deployment in 12 months |
| Target Return | 3x |
Areas our EIS Fund invests in
AI & Robotics
Biotech
Medtech
Electronics
Advanced Engineering
Cleantech
Why Invest in EIS Fund?
EIS investors can receive a mix of upfront and ongoing tax reliefs.
Up to 30% income tax relief
You may be eligible to claim 30% income tax relief on investments of up to £1 million in the current or previous tax year, or up to £2 million if at least £1 million is invested in knowledge-intensive companies.
Tax-free growth
Investing in an EIS fund can be a tax-advantageous way to supplement other long-term investments, such as a pension fund or ISA, if you have reached the maximum contribution limits for those accounts.
Capital gains deferral
Additionally, you may be able to defer paying capital gains tax on any realised gains for up to three years before or one year after the allocation of your EIS shares.
Inheritance tax relief
If you hold your shares for at least two years and they remain in your possession at the time of your death, 100% of your investment may qualify for inheritance tax relief.
Loss relief on exit
While the potential for growth in the EIS fund, which invests in early-stage or start-up businesses, is significant, and any capital gains are tax-free, you may claim up to 45% loss relief on your investment if it does not perform as expected. This loss relief may be applied to offset income tax at your marginal rate or capital gains.
**EMV Capital does not provide tax advice; tax treatment depends on the individual circumstances of each person or entity and could also change in the future. Investors should seek independent professional tax advice regarding EIS for tax relief.**
Meet our EIS portfolio companies
“EMV Capital has provided a unique support package, helping our team to restart and accelerate progress with DeepTech Recycling, and to access a supportive investor base that is committed to ESG and real impact in the plastic waste management space.”
Marvine Besong
Managing Director and CTO, DeepTech Recycling
FAQs
The maximum amount that can be invested in Enterprise Investment Scheme (EIS) investments is £1 million per tax year, or £2 million if anything above £1 million is in ‘knowledge intensive’ investments. It is possible to invest more, but EIS investors will not qualify for income tax relief on the excess, although they will still qualify for capital gains deferral and inheritance tax relief. Income tax relief can be carried back to the previous tax year if desired. The minimum commitment in EIS investment opportunities varies depending on the investment manager, but it is typically around £10,000.
The Enterprise Investment Scheme (EIS) is a high-risk investment option intended for sophisticated investors with a long-term outlook and a desire to invest directly in fast-growing British companies. It is suitable for those who do not need to generate income from their investment and are willing to commit their capital for an extended period of time. EIS may be particularly attractive to investors looking to defer tax on a capital gain from selling a business, manage a large income tax bill, or reinvest a tax-free lump sum from a pension, as start-ups can be an attractive asset class in these circumstances. It is important to note that investing in start-ups carries inherent risks.
There are two options for investors looking to purchase shares in companies that qualify for the UK EIS funds: investing in a single company or investing through a specialist manager. Investing in a single company involves researching and selecting the specific company to invest in, while investing through a specialist manager involves entrusting the investment to a professional who will invest in a portfolio of qualifying companies on behalf of multiple investors. This option may offer benefits such as ongoing oversight of the portfolio companies, the potential to influence board-level decisions, and expert guidance in negotiating an exit strategy. EIS investments through specialist managers can be structured as either approved or unapproved portfolios/funds. The main difference between the two is the timing of when EIS investors can claim tax reliefs. Approved EIS funds have additional requirements set by HMRC, including the requirement to invest at least 80% of the funds in knowledge-intensive companies within two years and to invest 50% of the funds within the first 12 months of the fund closing, followed by an additional 40% within the following 12 months (90% within two years).
Investing in companies that qualify for the UK’s EIS funds can offer investors the potential for high growth, tax reliefs to compensate for some of the risks, the opportunity to support young and innovative businesses, diversification of their investment portfolio, complementary long-term investments and tax planning opportunities. However, it is important to note that EIS is a high-risk investment and EIS investors may not get back the full amount they invest.
The date that shares are allotted in an Enterprise Investment Scheme (EIS) investment, rather than the date of investment, usually determines the investment date for tax purposes. Investors can claim income tax relief after their shares are allotted and they receive their EIS3 certificate, which can take around six months to be issued. However, for approved knowledge-intensive funds, the tax relief can be claimed for the tax year the fund closes, but only once the investor receives the EIS5 certificate, which may be up to 24 months after the fund closes.
EIS portfolios are typically allotted over the course of a year, but it can take 12-18 months from the time of investment. Single company EIS offers often have a closing date, which can be a set date or the point at which the pre determined fundraising target has been reached. Shares are typically allotted shortly after the offer closes. For approved knowledge-intensive EIS funds, the investment date for income tax purposes is the date the fund closes.
EIS investment funds have a carryback facility which refers to a tax relief option available to investors who participate in an Enterprise Investment Scheme. Under the EIS carry back relief rules, an EIS investor can apply all or part of their EIS investment against their tax liability for the tax year preceding the investment year. This means that an investor can claim tax relief for their EIS investment in the previous tax year, which can result in a reduction of their tax bill.
For example, if an investor makes an EIS investment in March 2023, they can choose to carry back the tax relief to the 2022/23 tax year (if they had taxable income in that year) rather than claiming it against their tax liability for the 2023/24 tax year. The carry-back option can be particularly beneficial if the investor’s taxable income in the previous tax year was higher than in the year of the investment.
This option is only available if the investor has sufficient EIS allowance in the tax year to which they are carrying back.
Unlike Venture Capital Trusts (VCTs), the returns from Enterprise Investment Scheme (EIS) investments are the result of capital growth as opposed to dividends payments. Each EIS offer will typically include a target return, which is a goal rather than a guarantee. Target returns can vary significantly, ranging from around 1.3 times to over 10 times the money invested. Higher target returns often indicate higher risks.
EIS investments, like all investments, carry the risk that the value and income from them may fall as well as rise, leading to the possibility of getting back less than the amount invested. This risk is greater with EIS investments because they are in small companies, which are more volatile and more likely to fail than larger companies. As a result, EIS investments are long-term investments that are not suitable for everyone, but are intended for high net worth or sophisticated investors who have no need for immediate liquidity and can withstand the potential of a total loss. In addition, EIS investments are less liquid than other stock market investments because there is no recognised market for these shares, making them harder to sell. To retain all the tax reliefs associated with EIS investments, investors must hold the investment for a minimum of three years and the companies must retain their qualifying status. Otherwise, investors may have to pay back the income tax relief they have received. It is important to note that the tax and product rules mentioned here are current, but may change in the future. Tax benefits depend on individual circumstances.