A Smart Overview of EIS Eligibility Criteria and Commission-Free Funding
The EIS eligibility criteria may look daunting at first – rules on share types, company age, trading history and risk profiles. But here’s the thing: nail these requirements and you’ll unlock up to 30% income tax relief, CGT exemptions, deferrals and more. Whether you’re a founder seeking growth capital or an investor hunting tax-efficient opportunities, understanding these criteria is non-negotiable.
In this guide, we’ll break down the key conditions you need to meet, compare traditional providers like Laggan with Oriel IPO’s commission-free, subscription-based approach, and show you exactly how to apply. Ready to see how EIS eligibility criteria can fuel your next funding round? Revolutionizing Investment Opportunities in the UK with EIS eligibility criteria
What Is the Enterprise Investment Scheme?
Origins and Purpose
Launched in 1994 by the UK government, the Enterprise Investment Scheme encourages investments into young, unquoted businesses. The idea is simple: reduce investor risk with hefty tax reliefs, so more capital flows into the high-risk world of startups.
Key Benefits for Investors
EIS delivers a bundle of tax perks:
- 30% Income Tax Relief on investments up to £1 million (or £2 million for knowledge-intensive companies).
- CGT Exemption: No capital gains tax on profits from EIS shares held for three years.
- CGT Deferral: Roll over gains from other assets into EIS investments without immediate tax.
- Loss Relief: Offset losses against income or gains if an investment goes south.
- Inheritance Tax Relief: 100% Business Relief after two years, shielding your estate from IHT.
These benefits hinge on meeting strict EIS eligibility criteria. Get them wrong, and you risk losing reliefs for you or your investors.
EIS Eligibility Criteria: What Companies Must Meet
1. Unquoted Status
Your company must not be listed on a main market. AIM-listed firms are treated as unquoted, but any public stock exchange presence beyond AIM disqualifies you.
2. Qualifying Trade
At least 80% of your activities must be qualifying trades. Excluded sectors include:
- Financial services
- Property development
- Energy generation
- Legal or accounting operations (unless incidental)
3. Size and Age Limits
- Gross assets under £15 million before investment and under £16 million after.
- Fewer than 250 employees (or 500 for knowledge-intensive companies).
- Company age no more than seven years (ten years for knowledge-intensive).
4. Risk to Capital
Your business must genuinely expose investors to risk. HMRC wants evidence you’re not just parking cash – you’re innovating, scaling and potentially facing losses.
5. Advance Assurance
Before you pitch to investors, secure advance assurance from HMRC. This non-binding nod tells backers you’re very likely to satisfy the EIS eligibility criteria, boosting their confidence.
Meeting the Criteria with Oriel IPO
Navigating these requirements solo can be tricky. Oriel IPO’s expert team guides you through:
- Document preparation for advance assurance
- Trading tests and sector assessments
- Gross asset and staff number verifications
- Ongoing compliance monitoring
With a transparent, commission-free subscription, you avoid hidden fees. Plus, Oriel IPO’s curated platform ensures only vetted, EIS-eligible ventures make the cut. Experience commission-free EIS eligibility criteria guidance at Oriel IPO
Applying for EIS: Step by Step
- Advance Assurance Application
Prepare your business plan, financial forecasts and trading history. Submit Form EIS1 to HMRC and await their confirmation letter. - Fundraising and Share Issue
Once you have that letter, you can offer shares to investors. Ensure you issue ordinary shares with no preferential rights. - Use of Funds
Spend the raised capital on qualifying business activities within two years of the share issue. - Compliance Statement
After four months of trading, file Form EIS1 again with detailed reports on fund usage. - EIS Certificates
On approval, HMRC sends EIS3 certificates for investors to claim relief.
Each step demands accuracy. One slip-up, and those reliefs vanish – for both you and your backers.
Comparing Providers: Laggan vs Oriel IPO
Whether you use Laggan or Oriel IPO, both offer solid EIS support. But there are key differences:
Laggan
Strengths:
– Thorough, personalised advice on every compliance point.
– In-depth resources and webinars.
Limitations:
– Fees based on a percentage of funds raised – less capital in your bank.
– Less emphasis on a streamlined, digital experience.
Oriel IPO
Strengths:
– Commission-free model: no slices taken from your raise.
– Subscription fees that keep costs predictable.
– Curated opportunities: every startup on the platform meets core EIS eligibility criteria.
– Educational hub: webinars, guides and hands-on support.
Limitations:
– As a non-FCA regulated platform, direct financial advice is limited. We partner with trusted advisors to bridge that gap.
In short, Laggan guides you through every detail but can be pricier. Oriel IPO balances expert support with a transparent, modern marketplace designed to lower costs and speed up your fundraising.
Tips to Maximise Your Tax Relief
- Plan Ahead: Start the advance assurance process early, ideally six months before you need funds.
- Document Everything: Maintain clear records of how every penny of EIS money is spent.
- Mind the Clock: Keep an eye on trading start dates, fund deployment windows and the three-year holding rule.
- Know Your Investors: Ensure they understand risks and the need to hold shares.
- Review Compliance: Conduct quarterly internal audits to catch any drift from the EIS eligibility criteria.
AI-Generated Testimonials
“Oriel IPO’s commission-free platform saved us over £20k in fees. Their EIS eligibility criteria guidance was spot-on, and we sailed through advance assurance.”
— Sarah Patel, Co-founder of GreenWave Tech
“I’ve never seen such clear, concise support on EIS. Oriel IPO helped us understand the rules and keep our investors happy. Plus, no commission meant more runway.”
— Mark Johnson, CEO of BioNova Solutions
“Oriel IPO’s subscription model was a breath of fresh air. The team’s expertise on EIS eligibility criteria is second to none, and the curated investor network sealed the deal.”
— Priya Singh, Founder of EduGrow Ltd
Conclusion
Mastering EIS eligibility criteria is crucial for any UK startup hunting tax-efficient funding. While traditional advisers like Laggan offer depth, Oriel IPO’s commission-free, subscription-based marketplace pairs expert support with predictable costs and vetted opportunities. Ready to streamline your fundraising and maximise reliefs? Start maximising your EIS eligibility criteria with Oriel IPO today
