Enterprise Investment Scheme (EIS) The EIS is a government scheme made up of a number of core tax reliefs. It is necessary to subscribe for ordinary shares in a qualifying company in order to obtain the tax reliefs of the EIS scheme. This represents a method of obtaining potentially substantial gains through investing in high risk companies as part of a diversified portfolio. In terms of companies, the EIS is versatile, able to be used by start-ups, established companies, trading companies and holding companies with trading subsidiaries. Companies must meet certain criteria, and must use the funds raised through the scheme for the purpose of a qualifying trade carried on mainly or entirely in the UK or another qualifying business activity.
VCTs are collective investments, listed on the London Stock Exchange and encourage investment in smaller companies in return for tax relief. They provide capital finance for small expanding companies with the aim of making capital gains for investors. They are a tax efficient way to invest larger sums of money, providing both income and capital gains tax reliefs, and are aimed at medium to large net worth private investors. Like investment trusts, VCTs are fully quoted collective investment funds that invest in a spread portfolio of qualifying companies.