EIS Calculator: Estimate Your Benefits

Expected Return

Enterprise Investment Scheme (EIS)

Investor Guide

For investors interested in supporting some of the UK's most high-growth, early-stage businesses, the EIS is among the most generous tax incentives to aid in maximising returns and minimising risk.

This free guide gives an in-depth insight into how the EIS can enable you to:

  • Claim 30% income tax relief on the value of your investment
  • Pay zero capital gains tax when selling EIS shares
  • Defer existing capital gains tax liabilities to later years
  • Pass on shares free of inheritance tax
  • Claim loss relief should an unexpected event arise

And also explains:
  • How to invest using the EIS
  • What type of companies you can invest in using the EIS
  • How the EIS can contribute to a diversified portfolio
  • The risks and returns associated with the EIS
  • The most frequently asked questions surrounding the EIS
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What is an EIS Calculator? How the EIS Calculator Works Benefits of Using the EIS Calculator Example of EIS Calculations

What is an EIS Calculator?


This EIS calculator is a specialised tool designed to help investors estimate the potential benefits of investing in an Enterprise Investment Scheme (EIS) eligible investment opportunity. It provides a detailed analysis of various tax reliefs and financial gains associated with EIS investments, essentially working as multiple calculators in one such as:

  1. Expected Return Calculation
  2. EIS Income Tax Relief Calculator
  3. EIS Capital Gains Tax Deferral Calculator
  4. EIS Loss Relief Calculator
  5. Net Loss (after income tax and loss relief)

Gaining a comprehensive understanding of these EIS features, among others, is crucial for investors aiming to make informed and strategic decisions.

How the EIS Calculator Works


The EIS calculator functions by analysing the financial circumstances of each investor. By incorporating variables such as investment amount, tax bracket, and anticipated growth, the calculator provides a detailed projection of potential tax reliefs, including EIS loss relief and CGT deferral.

This comprehensive analysis extends to estimating the overall financial impact of an EIS investment, offering investors a transparent view of potential performance, all factors considered.

By leveraging this tool, investors can strategically plan their investments, optimise tax efficiency, and align their financial strategies with long-term goals.

Benefits of Using the EIS Calculator


Some of the primary advantages of utilising an EIS tax relief calculator include:

  • Accurate Estimation of Tax Reliefs: The calculator displays tax savings, encompassing various reliefs such as income-tax relief and loss relief. Other than the expected return, EIS calculations are accurate meaning investors can better plan their investments.

  • Optimised Tax Efficiency: The tool aids in meticulously planning investments to maximise tax benefits while minimising liabilities, thereby enhancing the overall tax efficiency of an investor's portfolio.

  • Enhanced Financial Planning: By projecting potential investment gains, the calculator supports the development of robust long-term financial strategies, enabling investors to achieve their financial goals with greater confidence.

Example of EIS Calculations


Understanding the potential benefits of the Enterprise Investment Scheme can be enhanced by examining specific examples of EIS calculations, which also reveal how the EIS calculator effectively works these out.

EIS Investment Gain

An investor who invests £100,000 in an EIS-qualifying company and achieves a 3x return, growing the investment to £300,000, can benefit significantly from tax-free capital gains. The £200,000 gain is exempt from capital gains tax, substantially enhancing the overall return on investment.

EIS Loss Relief

Consider an investor who invests £100,000 in an EIS-qualifying company. If the investment results in a loss, the investor can claim loss relief against their income tax. Assuming a 45% income tax rate, the investor could potentially claim £45,000 in loss relief, significantly mitigating the financial impact of the loss.

EIS Deferral Relief

An investor with a capital gain of £50,000 from the sale of an asset can defer the capital gains tax by investing the amount in an EIS-qualifying company. This deferral allows the investor to postpone the capital gains tax liability, providing flexibility in managing their tax obligations whilst potentially benefiting from a lucrative return.

EIS Income-tax Relief

If an investor puts £50,000 into an EIS-qualifying company, they can claim 30% income tax relief on the investment. This results in a £15,000 reduction in their income tax liability, making the investment more financially attractive.

Net Loss Relief

Similar to EIS loss relief, net loss relief allows investors to combine income tax relief with loss relief for enhanced financial protection.

For instance, if an investor places £100,000 into an EIS investment opportunity and the investment unfortunately results in a total loss, they can claim both the 30% income tax relief and the loss relief. With a 45% income tax rate, the investor could claim £30,000 from income tax relief and an additional £31,500 from loss relief.

This means the net loss would be reduced to £38,500, representing a 38.5% loss on the original investment, offering a significant cushion in the rare event that the investment does not perform as expected.

Don't invest unless you're prepared to lose all the money you invest. This is a high-risk investment and you are unlikely to be protected if something goes wrong.
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Risk Summary

Estimated reading time: 2 min

Due to the potential for losses, the Financial Conduct Authority (FCA) considers this investment to be high risk.

What are the key risks?

  • You could lose all the money you invest
  • Most investments are shares in start-up businesses or bonds issued by them. Investors in these shares or bonds often lose 100% of the money they invested, as most start-up businesses fail.
  • Checks on the businesses you are investing in, such as how well they are expected to perform, may not have been carried out by the platform you are investing through. You should do your own research before investing.

You won't get your money back quickly

  • Even if the business you invest in is successful, it will likely take several years to get your money back.
  • 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.
  • Start-up businesses very rarely pay you back through dividends. You should not expect to get your money back this way.
  • Some platforms may give you the opportunity to sell your investment early through a 'secondary market' or 'bulletin board', but there is no guarantee you will find a buyer at the price you are willing to sell.

Don't put all your eggs in one basket

  • 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 any one to do well. A good rule of thumb is not to invest more than 10% of your money in high-risk investments. Learn more here.

The value of your investment can be reduced

  • If your investment is shares, 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.

You are unlikely to be protected if something goes wrong

  • 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.
  • Protection from the Financial Ombudsman Service (FOS) does not cover poor investment performance. If you have a complaint against an FCA-regulated platform, FOS may be able to consider it. Learn more about FOS protection here.

If you are interested in learning more about how to protect yourself, visit the FCA's website here.

For further information about investment-based crowdfunding, visit the crowdfunding section of the FCA's website here.
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Growth Capital Ventures (GCV) is backed by funds managed by Maven Capital Partners, one of the UK’s leading private equity and alternative asset managers.