The Enterprise Investment Scheme (EIS) is a government initiative that provides a valuable source of funding to early-stage companies while offering tax benefits to investors.
This page covers some of the most frequently asked questions about Enterprise Investment Scheme (EIS) investing, including EIS3 certificates, holding periods, loss relief, portfolio deployment and share transfers.
When will I get my EIS3 certificates?
The EIS3 certificates are usually distributed between 1 and 4 months after the investment has taken place, depending on how quickly they are processed by HMRC, and are uploaded to the Blackfinch portal. Clients can specifically opt to receive paper copies if they wish by contacting our Client Excellence team.
What should I do with my EIS3 certificates once received?
You will need these for when you complete your tax return, so keep them safe. To understand how to use them when claiming Income Tax relief, take a look at our guide: Claiming Income Tax Relief on EIS and VCT Investments.
How long should I hold EIS shares, and when can they be sold?
EIS investments are long-term by nature. To retain the full suite of tax reliefs, investors must hold EIS shares for a minimum of three years.
Shares can’t be sold until a portfolio company goes through an exit event – and investors won’t have control over when that happens. An exit is typically when a company is sold to a larger organisation or goes public via an Initial Public Offering (IPO). While exits are typically targeted between four to seven years, timelines can vary and are never guaranteed. It is also likely that the companies in an EIS portfolio will all exit at different times.
For a clear overview of how the Blackfinch Ventures EIS Portfolio works and the tax benefits it offers, you can watch our Blackfinch EIS Unpacked video.
I have moved and the address on my EIS3 certificate is now incorrect. Will this cause any problems when I come to claim Income Tax relief?
An outdated address on an EIS3 certificate won’t affect your ability to claim Income Tax relief, as long as you can confirm that you lived at that address when the investment was made. What matters most is the Unique Investment Reference (UIR) on the certificate, which is used by HMRC to process the claim. Your address can be updated by contacting our Client Excellence team.
When can I claim loss relief if a portfolio company has failed?
At Blackfinch, we run a portfolio structure, meaning our clients will be able to claim Loss Relief on any of the individual companies within their portfolio, should the companies fail, or be sold for less than the amount invested. Read our ‘Blackfinch Guide to Loss Relief’ to understand how loss relief may apply to you.
If a company fails or is sold for significantly less than the amount invested, you may be able to claim Loss Relief against your income or capital gains liability. We would write to you when Loss Relief can be claimed on a specific investment.
When will I know all of my funds are deployed?
You’ll be kept informed each time a new deployment is made. A transaction statement will be sent to you confirming how much of your investment has been deployed and how much remains. These statements are also uploaded to the Blackfinch Portal, so you can track the full deployment process. Once all funds have been deployed, this will be clearly shown in your transaction statement.
Can you offer full deployment within the same tax year?
Yes. As standard, the Blackfinch Ventures EIS Portfolios aim to deploy funds fully within 12 months of investment. However, we offer an option to have all funds received by a mid-March cut-off date fully deployed within the current tax year, subject to a diversification waiver to confirm that the funds are to be deployed even if the portfolio needs to be smaller than our usual minimum of ten high-potential companies.
At Blackfinch, over the past five years, all funds received by the cut-off have been fully deployed in the tax year into portfolios containing at least ten companies.
You can explore more “Reasons Why” advisers and clients choose the Blackfinch EIS Portfolios here.
How many companies do you invest into?
Our multi-sector portfolios invest in ten or more companies, diversified across various technology sectors and stages of growth – from early-stage businesses gaining initial market traction to more established firms scaling their operations.
Can I exclude certain companies from my EIS investment if it is my second investment in the Blackfinch EIS Portfolios?
No, the investor cannot choose which companies they invest into.
Where can I learn more about the founders of the companies?
If you'd like to understand more about the founders leading the businesses in your portfolio, our Tech Trailblazers guide is a great place to start. It offers insights into the companies driving innovation and growth within the Blackfinch Ventures EIS Portfolio.
You can also visit our YouTube channel, where we’ve shared a series of short videos spotlighting the portfolio companies and the founders behind them.
Can I transfer my shares to someone else?
There are no restrictions on the free transferability of the shares. However, if they are transferred within 3 years, you will no longer qualify for the upfront Income Tax relief, and you would be required to pay the Income Tax to HMRC if the relief has been claimed.
It is important that you speak to your financial adviser and a tax adviser before making any decisions related to transferring your shares.
What happens to my EIS Portfolios investment when I die?
When you die, your Blackfinch EIS Portfolios investment becomes part of your estate and will be managed by your personal representatives (the executors named in your will).
EIS shares need to have been held for two years to qualify for Business Relief from Inheritance Tax. Regardless of the period held, there is no reclaim of EIS reliefs already received, notably income tax relief.
However, the inherited shares won't be EIS shares in the beneficiary's hands so further EIS benefits (and restrictions) would no longer apply. For example, Capital Gains Tax would be payable by the beneficiary on any gain relative to the value of the shares at the date of inheritance.
What value do I put on the IHT100 form for my EIS shares?
When completing the IHT100 form, you should use the full value of your EIS portfolio as at the date of the chargeable event, such as the date of death. In most cases, this will align with the value shown on your latest Blackfinch statement. However, if the chargeable event occurred between statement dates and any significant updates have taken place, we can provide a more up-to-date valuation. Our Client Excellence team can support you with this.
If you can’t find the answer you’re looking for, or would like to discuss a specific client scenario, please get in touch with your local Business Development Manager.