Don’t invest unless you’re prepared to lose all the money you invest. These are high-risk investments and you are unlikely to be protected if something goes wrong. Take 2 mins to learn more.
Due to the potential for losses, the Financial Conduct Authority (FCA) considers this investment to be high risk.
Last updated: 01 August 2026
If the business you invest in fails, you are likely to lose 100% of the money you invested. Most start-up businesses fail.
Protection from the Financial Services Compensation Scheme (FSCS), in relation to claims against failed regulated firms, does not cover poor investment performance. Try the FSCS Investment Protection Checker or visit: www.fscs.org.uk/check/investment-protection-checker.
Protection from the Financial Ombudsman Service (FOS) does not cover poor investment performance. If you have a complaint against an FCA-regulated firm, FOS may be able to consider it. Learn more about Financial Ombudsman Service Protection or visit: www.financial-ombudsman.org.uk/consumers .
Even if the business you invest in is successful, it may take several years to get your money back. You are unlikely to be able to sell your investment early.
The most likely way to get your money back is if the business is bought by another business or lists its shares on an exchange such as the London Stock Exchange. These events are not common.
If you are investing in a start-up business, you should not expect to get your money back through dividends. Start-up businesses rarely pay these.
Putting all your money into a single business or type of investment, for example, is risky. Spreading your money across different investments makes you less dependent on anyone to do well.
A good rule of thumb is not to invest more than 10% of your money in high-risk investments. Read more at FCA InvestSmart Guide or visit: www.fca.org.uk/investsmart/5-questions-ask-you-invest .
Putting all your money into a single business or type of investment, for example, is risky. Spreading your money across different investments makes you less dependent on anyone to do well.
The percentage of the business that you own will decrease if the business issues more shares. This could mean that the value of your investment reduces, depending on how much the business grows. Most start-up businesses issue multiple rounds of shares.
These new shares could have additional rights that your shares don’t have, such as the right to receive a fixed dividend, which could further reduce your chances of getting a return on your investment.
If you are interested in learning more about how to protect yourself, visit the FCA website: FCA InvestSmart or visit: www.fca.org.uk/investsmart .
Please find the PDF version of the Risk Summary .
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The conditions listed below must be met by a company to qualify for investment under EIS, both at the time of the investment and throughout the three-year minimum holding period. Otherwise, the company will not be qualifying, and investors will lose and/or face clawback of the tax reliefs given:
The first commercial sale occurred within the last seven years, or the last ten years for a Knowledge Intensive Company (KIC).
Have fewer than 250 full-time employees or fewer than 500 for KICs.
Carry out a qualifying trade.
Gross assets are less than £15 million before the investment and £16 million following the investment.
The company cannot be controlled by another company, meaning that another company should not own more than 49% of the company’s shares.
Not listed on a recognised stock exchange, excluding the Alternative Investment Market.
A permanent establishment in the UK.
Raise less than £5 million a year, with a maximum investment of £12 million over the company’s life.
The funds must be spent within two years of the investment.
Be able to demonstrate growth and development in the future.
Shares will be full-risk ordinary shares with no preferential arrangements in place.
There must be no capital preservation provisions, such as joint venture partnerships, in place.
To qualify for EIS, a company’s first commercial trading date must be within the last seven years, or ten years for knowledge-intensive companies. Companies can use either the date of commencement of trade when revenue was generated or when the business began marketing its product or service.
In the EIS application, HMRC will ask for both the date of incorporation and the company's first commercial trading date, if applicable. If the company has not yet begun trading, state this in the application and indicate that the investment raised will be used for preparation to trade. If HMRC has any reason to doubt the dates the company began trading, it will look for information both in the documents provided and what is available online.
Companies whose first commercial sale occurred more than seven years (or ten years for KIC) ago will not qualify for EIS unless they can meet at least one of the three conditions. HMRC will not accept any other circumstances than those listed:
Companies should be aware that these applications are more complex than those done within the first seven years of the company's date of first commercial sale.
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