Enterprise Investment Schemes & Seed Enterprise Investment Schemes

Budget Changes

Clubfinance can arrange your Enterprise Investment Scheme ('EIS') and Seed Enterprise Investment Scheme ('SEIS') investments on an execution-only basis, although due to the way some EISs and SEISs are set up we cannot arrange every EIS or SEIS available. Depending on structure of the product, our terms for arranging EIS and SEIS investments are:

• 75% rebate of our commission (where possible as a reduction in charges);
• 100% rebate of our initial commission (with Clubfinance retaining the trail commission).
• an upfront fee (typically 0.75% of the investment amount).

In rare cases Clubfinance Ltd may receive a share of performance fees, which we would retain in full. We only broker EIS and SEIS investments where it is cheaper (or no more expensive) to use Clubfinance compared to going direct.


The Government offers tax breaks for individuals investing in small high-risk companies through various Venture Capital Schemes, including the Enterprise Investment Scheme (EIS), Seed Enterprise Investment Scheme (SEIS), and the Venture Capital Trust (VCT) scheme.

EIS and Seed EIS investments are high to very high risk investments and may only be suitable as medium or long-term investments. You can lose tax reliefs if you do not hold your investment for the required period (see tax notes below). Clubfinance offers an execution-only service; Clubfinance does not give advice or recommendations. If you have any doubts as to the suitability of a particular (S)EIS, or (S)EISs in general, or you require advice of any kind (including tax advice), you should contact another appropriate firm that does give advice.

What is an EIS? 

Enterprise Investment Schemes are designed to help certain types of small higher-risk unquoted trading companies to raise capital. Investors are provided with a range of tax reliefs for investing in eligible shares in these qualifying companies. There is a risk that these companies may not perform as hoped and in some circumstances they may fail completely.

Depending on the type of EIS, the EIS may represent an investment in the shares of one or more than one EIS-qualifying company. So, before you invest in an EIS, together with the risks inherent in EISs in general, you should consider the extent to which your investment risk will be spread over a number of companies. As EISs represent an investment in unquoted shares, it may be difficult to sell your investment.

To qualify for EIS tax reliefs, both the shares and the company issuing the shares must meet various conditions. EIS tax reliefs will be lost if the company or the share issue does not satisfy the conditions throughout the required period. Although the company can obtain advance assurance, please note that it cannot be determined in advance whether the conditions of the Enterprise Investment Scheme will be met. The fact that an investment qualifies for EIS tax reliefs does not guarantee the safety or success of any investments you make in an EIS.

EIS qualifying companies can be start-ups as well as established companies, and need not be incorporated or resident in the UK. Companies must meet certain conditions including that the relevant assets of the company (or group of companies) may not exceed £15 million immediately before the investment and £16 million immediately afterwards. In addition, the EIS qualifying company must have fewer than 250 full-time employees (or, as announced at the 2015 Budget fewer than 500 employees for knowledge-intensive companies). To be qualifying there is also a £5 million annual limit on the total amount that can be raised or received in total by a single company under Government State Aid schemes including from VCT and the EIS (and, as announced at the 2015 Budget a cap on total investment of £12m (or £20m for knowledge-intensive companies)). Also announced at the 2015 Budget, qualifying companies are also subject to an age limit: with some exceptions this is 7 years from the date of first commercial sale (or 10 years for knowledge-intensive companies). The funds raised must be used for the purpose of a qualifying trade and the company must have a permanent establishment in the UK. Most kinds of trade can qualify including: manufacturing; the provision of services; and retail and wholesale distribution.

Subscriptions must be for new full-risk ordinary shares. The shares must not carry any preferential rights (with some limited exceptions) or any right to be redeemed. If the shares were issued to raise money to enable the company to prepare to carry on a qualifying trade, the 'three-year' period begins when the shares are issued and ends three years after the company (or subsidiary) begins to carry on that trade.

As with any share-based investment, the value of an EIS depends on the performance of the company or companies in which you invest. The value of the investment and the dividend stream (if any) can rise and fall. So you may get back less than you originally invested, even taking into account the tax breaks. EISs carry initial charges and costs together with annual costs, charges and fees, some of which may be performance related. These can be complex. Please refer to the product documentation for the EIS(s) you are interested in for details. The levels of charges for EISs may be greater than Unit Trusts and Open Ended Investment Companies.

What is Seed EIS?

The EIS information above also generally applies to Seed EIS, however, some differences are highlighted below. The Seed EIS is designed to help very early stage companies, so the tax reliefs are greater reflecting the higher level of risk. The Seed EIS rules mirror those of EIS as it is anticipated that companies may go on to use EIS after an initial investment under SEIS.

Companies must meet certain conditions including that the relevant assets of the company (or group of companies) may not exceed £200,000. In addition, the SEIS-qualifying company or its group must have fewer than 25 employees. The company must not have received any VCT or EIS investment, and cannot receive more than £150,000 under SEIS - state aid received within the previous three years is included towards this total. Any trade carried on at the point of investment must be less than two years' old, and the company must not have carried on any other trade before this. All the money raised must be spent for a qualifying business activity within three years of the date of issue of the SEIS-qualifying shares.

The different types of EIS

In all cases the underlying investment is EIS Shares or SEIS Shares, i.e. eligible shares in qualifying companies for EIS or SEIS purposes respectively. A brief explanation of the different types of EIS is included below.

Single Company EIS

EIS Shares represent a direct investment in the eligible shares of a single qualifying company. For tax purposes the relevant date is the date on which the shares are issued (see also carry back for Income Tax relief). Tax relief will generally be available on the whole amount invested.

EIS Funds

Investment through an EIS investment fund allows money pooled from a number of investors to be subscribed for EIS Shares in a range of companies selected by the fund manager. EIS Funds can be approved or unapproved (see below).

Note that many EIS 'Funds' (including Approved Investment Funds - see below) are structured as discretionary portfolios, with all investors having the same portfolio of shares. Whereas Approved Investment Fund status is clear cut (see below), the underlying structure of the investment vehicle may be more like an EIS Managed Portfolio.

Approved EIS Funds (Approved Investment Funds ('AIF's))

Approval, which is given by HMRC, is relevant only to the tax treatment of the investments. It in no way bears on the commercial viability of the investments. It simply means that the fund satisfies certain administrative criteria laid down by HMRC. The main ones are:

AIFs enjoy the following advantage:

Tax relief will only be gained on amounts actually invested in EIS Shares. Any charges deducted by the fund upfront from your subscription for example, will not attract tax relief.

Unapproved EIS Funds

Unapproved funds do not have to satisfy the criteria relating to the number or timing of investments in EIS Shares.

It can be difficult to classify a product as either an Unapproved EIS Fund or an EIS Managed Portfolio. For the purposes of this website, we generally classify products that are limited by a closing date and/or a maximum amount to be raised, as Unapproved EIS Funds. Depending on the product, investors in Unapproved EIS Funds may generally all invest in the same EIS Companies, or there may be some variation, for example if the fund is open and making investments over a long period.

For tax purposes the relevant dates are the dates when the EIS Shares in which the fund invests are issued, not the date when you invest in the fund, and not when the fund closes (see also carry back for Income Tax relief).

Tax relief will only be gained on amounts actually invested in EIS Shares. Any charges deducted by the fund upfront from your subscription for example, will not attract tax relief.

EIS Managed Portfolios

An EIS Managed Portfolio is a discretionary portfolio which is, or is to be, invested wholly or mainly in EIS Shares. These are usually individual arrangements (individual investors may have different portfolios), which are generally tailored to each investor's requirements.

For tax purposes the relevant dates are the dates when the EIS Shares in which the Portfolio invests are issued, not the date when you put funds into the Portfolio (see also carry back for Income Tax relief).

Tax relief will only be gained on amounts actually invested in EIS Shares. Any charges deducted by the Portfolio upfront from your subscription for example, will not attract tax relief.

Seed EIS

Seed EIS investments can potentially be structured as individual SEIS Shares, Unapproved SEIS Funds, or potentially SEIS Managed Portfolios. However, due to the small amount that can be invested in total in an individual company, single company offers are unlikely to be offered to the wider investing public. A number of funds combine investment in both EIS and SEIS Shares. Depending on the fund this can be for example: a fixed proportion in each; a choice of whether or not to include SEIS Shares; or an expected proportion in each that can vary.

Risk Warnings

EIS and SEIS are high-risk investments and may only be suitable as medium or long-term investments. Clubfinance Ltd offers an execution-only service; Clubfinance does not give advice or recommendations. (S)EISs are complex products and are not suitable for all investors. If you have any doubts as to the suitability of a particular (S)EIS, or (S)EISs in general, or you require advice of any kind, you should seek a personal recommendation from a professional adviser. Do not invest in an EIS or an SEIS unless you have carefully thought about whether you can afford it and whether it is right for you.

Please refer also to the risk warnings and other information contained within the Prospectus, brochure, particulars, information memorandum, offer document, or other product documentation for the EIS or SEIS that you have chosen, together with Clubfinance's Terms of Business.

(S)EIS investments include: direct investment in an individual EIS or SEIS share; investment in an EIS, SEIS or mixed EIS & SEIS fund (including Approved Investment Funds (EIS only) and unapproved funds); and investment in an (S)EIS managed portfolio. Funds and portfolios invest wholly or mainly in SEIS and/or EIS shares.


(S)EIS shares (as a direct investment & as the underlying investments of funds & portfolios)

Spread of risk


Charges & performance fees

Security of capital

Selling your investment



It is not possible to cover every risk here, but here are some important risk areas to consider.

Start-up business failures & the risk of capital loss

Most start-up businesses fail, so investors in them need to understand that it is likely they will lose 100% of any money invested, and they have little or no protection if the business or project fails. Therefore, do not invest any money you are not prepared to lose. The risk of capital loss, even if the business does not fail, is exacerbated if the price paid for a security is based on an over-valuation of the business, or if the security is a long-term debt security that will not return capital for periods such as 20-25 years. Investors should not invest in a start-up business unless they know how to value it, and/or have carried out their own due diligence on the investment professional who will make the investment on their behalf (e.g. an authorised and regulated investment manager).

No dividends and equity dilution

Dividends are usually rare or non-existent. Even if the company remains a going concern, investors in unlisted shares in a start-up or young company face the risk of never receiving a return on their investment if those controlling the company decide not to issue dividends. In addition, if the business is sold or becomes listed, investors may find their share in these profits (if any) is reduced if the value of shares is diluted by subsequent issues of new shares (which may include the grant of options to employees or directors for example). Investors need to understand that they will have almost no control over these decisions. In addition, new or existing shares may have more favourable rights (e.g. to dividends and/or sale proceeds) compared to those you invest in.

No secondary market - illiquidity

After purchasing unlisted equity or debt in a company, even if it remains a going-concern, investors will usually find there is no, or only a limited, secondary market for their investments. Investors need to understand that they will probably have to wait until an event occurs, such as the sale of the company, a management buy-out or a flotation, before getting a return on an equity investment (if any). Also, in the event of their death, ownership of these investments will probably need to be transferred the investor's beneficiaries, which may incur costs (e.g. administration and/or valuation charges).


Achieving a positive return when investing in unlisted securities is difficult and statistically unlikely. It can also take considerable time for a start-up business to generate a return, so investors must be prepared to wait until well into the future for a potential return.

Due diligence

It is difficult for an investor to assess the value of an investment and the likelihood of investment returns without access to reliable due diligence information. Investors need to be properly informed to ensure they can understand and assess what is involved. The due diligence could be carried out by: the investor; a third party (such as an authorised and regulated investment manager); or both.

So that they can make decisions on an informed basis, investors need to be satisfied that they have enough reliable information to enable them to understand:

Investor behaviour

Detrimental biases that can be relevant to non-readily realisable securities include (but are not limited to) the following.

Other risks, including investment-specific risks

Tax notes

EIS and SEIS carry certain tax advantages. Below is a brief summary of some of the major points relating to EIS Shares purchased in the current tax year 2016/17. This is an overview only and cannot cover the full complexities of the tax rules. See also 'What is an EIS?' and 'The different types of EIS' above.

Please note that tax rules can change at any time.

For more information please see the HM Revenue & Customs website (click here for EIS, and click here for SEIS) and the product documentation for your chosen (S)EIS.

You may also find the following HMRC helpsheets useful, which may relate to an earlier tax year.

HS286: Negligible Value Claims and Income Tax losses on disposals of shares you have subscribed for in qualifying trading companies
HS297: Enterprise Investment Scheme and Capital Gains Tax
HS341: Enterprise Investment Scheme - Income Tax
HS393 Seed Enterprise Investment Scheme - Income Tax and Capital Gains Tax reliefs

Due to the complexity of the tax reliefs, if you are in any doubt, you should consult a tax adviser.


There are various tax advantages that you may be entitled to by investing in eligible shares in qualifying companies for EIS or SEIS purposes:

Income Tax Relief Yes Yes
Capital Gains Tax Exemption Yes Yes
Capital Gains Tax Deferral Relief Yes No
Capital Gains Tax Reinvestment Relief No Yes
Loss Relief Yes Yes
Inheritance Tax (Business Relief) Yes Yes

Please note that special rules apply if you are or want to become a paid director of a company in which you invest.

Please note that dividends from EIS & SEIS shares are not exempt from Income Tax.

Income Tax Relief

(See also 'The different types of EIS' above).
If you invest in eligible shares in qualifying companies for EIS purposes ('EIS Shares'), you may be entitled to Income Tax Relief on the amount you invest up to a total of £1 million for shares issued in any one tax year. The limit for SEIS-qualifying shares ('SEIS Shares') is £100,000 each tax year.

Income Tax Relief at 30% of the amount actually invested in EIS Shares, or 50% for SEIS Shares, is available to be set against any Income Tax liability that is due, whether at the lower, basic, higher, or additional rate, but relief will be limited to the amount that reduces the investor's Income Tax liability to nil.

Claims for Income Tax Relief are usually made before it is known whether all the conditions of the EIS or SEIS have been satisfied in relation to the company and the shares. If it turns out that any of those conditions are not met, any Income Tax Relief obtained will be withdrawn in full.

To be eligible for Income Tax Relief, investors must not be connected for EIS or SEIS purposes with the companies in which they invest. Investors who do not qualify for Income Tax Relief because they are connected with the companies for EIS purposes may still qualify for Deferral Relief, and in some cases Loss Relief.

Within three years of the date of issue of the (S)EIS Shares*, an investor's Income Tax Relief will be wholly or partly withdrawn in a number of circumstances, many of which would trigger a chargeable event in relation to EIS shares to which Deferral Relief is attributable.

There are six main circumstances. For SEIS these also apply to Capital Gains Re-investment Relief.

* if the EIS Shares were issued to raise money to enable the company (or a subsidiary) to prepare to carry on a qualifying trade the 'three year period' begins when the shares are issued and ends three years after the company or subsidiary begins to carry on that trade.

Income Tax Relief Carry Back

Investors may elect to carry back all or part of their EIS or SEIS investment into the tax year prior to the tax year in which eligible shares are issued (note that for an Approved EIS Fund also, the relevant dates for carry-back purposes are the dates when individual EIS-qualifying shares are issued, and not the date the fund closes). The level of relief carried back is limited by the limit for the tax year receiving the carry back. This is provided there is sufficient Income Tax liability to offset. While this has the effect of carrying back some or all of the relief to the preceding tax year, it has no bearing on the 'relevant periods' which apply to those shares.
The Income Tax relief is at the rate applicable for the year it is claimed in.

Capital Gains Tax Exemption

Provided that no Income Tax relief has been withdrawn, a gain which arises after at least three years* on the disposal of any of the shares, on account of their increase in value over the holding period, will be exempt from Capital Gains Tax where you have received Income Tax Relief in full on the whole of the your subscription(s) for the (S)EIS shares.

* if EIS Shares were issued to raise money to enable the company (or a subsidiary) to prepare to carry on a qualifying trade the 'three-year period' begins when the shares are issued and ends three years after the company or subsidiary begins to carry on that trade.

Capital Gains Tax Deferral Relief (EIS only)

When a chargeable gain arises, it is usually assessed for the tax year in which it arises. Deferral Relief enables you to postpone the gain until a later tax year if you subscribe for eligible shares in a qualifying company for EIS purposes, by making a claim to have some or all of the amount you subscribed for the shares concerned set against the chargeable gain.

The gain is deferred until a chargeable event occurs in relation to the shares. A gain equal in amount to the amount of the deferred gain (or in some cases part of the amount of the deferred gain) is treated as arising when a chargeable event occurs.

When chargeable events occur (e.g. disposal, the shares cease to be eligible, or the company ceases to be qualifying) the deferred gain is brought back into charge. In some cases, shares that cease to be eligible may be treated as though they were never eligible.

Deferral Relief can be claimed by individuals and by the trustees of certain trusts, and you can still qualify, even if you are connected with the company for EIS purposes.

The Deferral Relief shares must be issued in the period beginning 12 months before, and ending three years after, the accrual of the gain on which relief is claimed.

Provided that the company issuing the shares is not rendered non-EIS qualifying by the size of the issue, there is no upper limit and no minimum amount that can qualify for Deferral Relief.

Capital Gains Reinvestment Relief (SEIS only)

When you dispose of an asset and make a gain, you usually pay Capital Gains Tax for the tax year in which you dispose of the asset. Reinvestment Relief provides the possibility to treat a gain as exempt from Capital Gains Tax if you acquire SEIS Shares. You cannot get Reinvestment Relief unless you also get SEIS Income Tax Relief.

50% of the amount you invest in SEIS Shares that qualifies for Income Tax Relief can be set against a gain in the same tax year as the Income Tax Relief was claimed. Relief is also restricted to a maximum of 50% of the gain.

Loss Relief

If you are an individual and dispose of shares (to which Income Tax Relief is attributable) at a loss for Capital Gains Tax purposes, you may claim Loss Relief on an amount equal to the loss (less any Income Tax Relief attributable to those shares) provided certain conditions are met.

Loss Relief is given as a deduction from your taxable income for the tax year in which the loss arises, or for the preceding tax year, or both if there are sufficient losses. The amount of Income Tax relief must be deducted from the loss.

Instead of claiming Loss Relief, you can, if you prefer, set the loss (less any Income Tax relief attributable to the shares) against chargeable gains in the usual way.

Where you have insufficient income or gains to use up all of this adjusted loss, any unused part will be carried forward to set against chargeable gains arising in later tax years.

In some cases, if Income Tax Relief is not attributable to the shares when the loss arises, under some circumstances, it may still be possible for you to obtain Loss Relief.

Inheritance Tax

Holdings of EIS and SEIS Shares may be exempt from Inheritance Tax by qualifying for Business Relief after a minimum holding period of two years. Please see the HMRC website for more information, click here.

Open EIS & SEIS Schemes

Click here for a list of the (S)EIS investments for which further information is available on our website.

How to invest - the process

Documents you need to read and retain can be accessed by clicking the icons against each EIS or SEIS on the relevant Open EIS & SEIS page which are available once you have gone through online investor certification. Note that information on AIM EIS products is not subject to the investor certification process. If you have any difficulties please use the contact form below.

Clubfinance Ltd.
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If you are posting us an item by Recorded or Special Delivery, please use the following address:

Clubfinance Ltd
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For further information, please see our list of currently available EIS and SEIS offers. If you require any further information or clarification, or want to ask about an offer that is not listed, please use the form below to contact us. Please remember we offer an execution-only service. Please contact a financial adviser if you need advice.

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