Last updated on 18 August 2026
The EIS can help cut your tax bill in the UK… often by thousands of pounds.
The Enterprise Investment Scheme (EIS) is a government-backed incentive that gives tax reliefs to people who invest in early-stage UK companies. It’s especially popular among high earners, angel investors, and anyone involved in crypto, tech, or startups. In short, EIS encourages you to take risks on young businesses by offering major tax benefits if things go wrong, or even better, if things go well.
What is EIS?
Enterprise Investment Scheme is referred to as EIS. It was introduced in 1994 to assist small, high-risk businesses in raising capital. You can receive tax relief on your income, capital gains, and even losses when you invest in a business that qualifies for the EIS.
It’s not just for venture capitalists or rich bankers. Even individuals investing a few thousand pounds in UK startups can claim EIS tax relief.
EIS Tax Relief in the UK
When you invest in an EIS company, you gain the following benefits:
- 30% Reduction in Income Tax: Up to £300,000, or 30% of your investment, can be deducted from your income tax liability. For example, if you invest £10,000, you can reduce your tax by £3,000.
- If you keep the shares for at least three years, there is no capital gains tax.
- Relief from Loss You can deduct the loss from income or capital gains if the business fails.
- No Inheritance Tax if you hold the shares for 2 years or more.
This is why it’s often part of wealth planning, especially for those in tech and crypto accounts.
Who Can Benefit?
EIS is often used by:
- Investors with large income tax bills
- Founders reinvesting in startups
- Crypto traders who had gains in earlier years
- Anyone with interest in Web 3 crypto and early-stage UK businesses
For example, say you are a crypto accountant client who made large gains in 2021 and want to plan ahead. By using EIS now, you can reduce this year’s tax and protect future gains.
How EIS Works with Crypto Tax?
This is where it gets useful for crypto tax accountants.
Let’s say you’ve made big gains on crypto in earlier tax years. By putting those gains into EIS shares, you can postpone paying capital gains tax. Only when you sell those shares is the tax due. This allows you to make plans.
You can also use EIS loss relief to offset against crypto gains. For example, if you lose £10,000 on an EIS company and are in the 45% tax band, you could recover £4,500.
For clients using crypto accounts, this is a strategic way to manage risk.
Limits and Conditions
- Maximum investment per year: £1 million (or £2 million if at least £1 million goes into knowledge-intensive companies)
- To maintain the relief, you must retain the shares for a minimum of three years.
- The business must not be listed on a stock market and be eligible for EIS.
- You must not be connected to the company (e.g. as an employee or director, unless certain rules apply)
These rules are strictly checked. A good crypto accountant in UK can help make sure all the paperwork is right.
Why Wealth Planners Use EIS?
EIS is not just about tax, it’s about risk and reward.
If you are already investing in Web 3 crypto startups or new fintechs, you’re probably within the EIS bracket. That means every pound you invest can do double the work, funding innovation and reducing your taxes.
Many high-net-worth individuals use EIS in combination with pensions, ISAs, and crypto tax planning to keep their wealth working efficiently.
Things to Watch Out For
EIS can go wrong if you:
- Pick companies that lose all your money
- Forget to file the EIS3 certificate (needed for the relief)
- Don’t meet the holding period
Working with crypto tax accountants and advisors who understand both EIS and crypto is key.
Final Thoughts
EIS is not just a tax trick. It’s a tool that helps investors fund young companies while reducing their UK tax bill. If used well, it can reduce income tax, capital gains tax, and even protect you from losses.
And for anyone in the crypto accounts space, EIS adds a layer of planning that traditional tax reliefs can’t offer.
If you’re unsure how it fits into your personal or business finances, speak to a specialist.
Need help planning your EIS investments or managing your crypto taxes? Talk to a qualified expert at Crypto Accountants.
We help investors, founders, and crypto professionals make the most of tax reliefs like EIS.
FAQs
Can I use EIS to reduce my crypto tax bill?
Yes. If you reinvest gains into EIS, you can defer CGT. You can also use loss relief to offset gains from crypto.
What’s the maximum tax relief I can get from EIS?
You can claim 30% income tax relief on up to £1 million (or £2 million for certain companies), so up to £300,000–£600,000 back.
Do I need a financial advisor to use EIS?
Not legally, but it helps. Especially if you have crypto investments or complicated accounts, a crypto accountant can guide you.
Can EIS be used by someone investing in Web 3 crypto startups?
Yes, many Web3 startups are eligible for EIS. Just make sure they meet HMRC’s criteria.
