Celebrating 30 Years of the Enterprise Investment Scheme driving UK innovation and growth

Introduction 

This September marked the 30^th anniversary of the launch of the Enterprise Investment Scheme (EIS). Over 350 entrepreneurs, investors, and advisers celebrated the occasion, honouring the EIS’ overwhelming influence on the UK’s entrepreneurial landscape. 

The EIS has been an essential pillar in transforming entrepreneurship and innovation in the UK, and it has undoubtably revolutionised the country’s economic growth.  

Since its launch in 1994, EIS has helped more than 56,000 companies access the funding they need to launch, develop, and grow their business, with more than £32 billion invested through the EIS. This has had a knock-on effect for the wider population by creating new jobs and boosting the economy across the UK. It has also been a significant driver in advancing technologies in sectors such as fintech and life sciences, strengthening the UK’s global leadership in these areas. 

And we’ve been there since the start too. We pioneered the first EIS fund, creating a new structure that included features of best practice venture capital funds and made it work for private investors, allowing the EIS tax benefits to flow through to the investors. Since then, we have helped thousands of investors to invest in the UK start up ecosystem and have helped build many successful companies and created £billions of value. And we feel like we are just getting started! 

Evolution of the EIS 

The EIS continues to evolve, adapting to the needs of investors and the requirements of start-up businesses. Past changes to the scheme include increasing investment limits in line with inflation, as well as ensuring the scheme remains attractive for both investors and early-stage companies.  

By remaining adaptable, the EIS continues to be essential for driving innovation across the UK, as well as supporting capital investment; this has been evermore essential as we navigate a post-Brexit, post-pandemic world, where the EIS rests as one of the beacons supporting the recovery of our economy through the growth of new companies and new job opportunities.  

Tax benefits, reservations, and promotions 

Despite the fact that EIS has facilitated over £9 billion in tax reliefs for those eligible, investors are often put off by EIS investments due to their high-risk nature. However, much of this risk is alleviated by the significant tax benefits that EIS investments offer. This remains a highlight in the Government’s effort to incentivise investment in start-up businesses in the UK – the tax relief benefit alone can make a dramatic difference in enhancing realised returns for investors. 

However, despite its considerable success and potential to support the UK’s economic growth, the Enterprise Investment Scheme remains relatively unknown among many individual investors.  

Christiana Stewart-Lockhart, Director General of EISA said: “EIS has been instrumental in driving investment fuelling the growth of thousands of ambitious businesses in the UK. More than 40,000 people invest through the EIS each year, yet public awareness remains surprisingly low. This 30th anniversary serves as an important opportunity to raise this awareness and celebrate the transformative impact of the EIS. The extension of the sunset clause to 2035 is an encouraging step, but more needs to be done to expand awareness and ensure continued support for UK innovation.” 

While the scheme is well-regarded in financial circles, the EIS remains underutilised by many who could benefit from it. There may be a number of reasons why so many are yet to discover the EIS, and with so many reasons to expand and develop the scheme, raising awareness amongst new investors going forward is absolutely essential.  

Boosting promotion, refining the process of claiming tax relief, and broadening eligibility criteria could all make the EIS more accessible and attractive to more individuals – something which will be essential in supporting the next generation of entrepreneurs. 

Our invitation to you 

It goes without saying that at a time when the UK faces economic uncertainty, particularly in the lead up to this year’s October budget, the EIS continues to offer a beacon of hope for both business founders and investors, as well as the UK economy as a whole. 

With ongoing the Government’s support, spreading awareness about the EIS, and increasing participation from investors, the EIS is well-positioned to continue to drive the UK’s economic success.