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Due to the potential for losses, the Financial Conduct Authority (FCA) considers this investment to be high risk.
What are the key risks?
1. You could lose all the money you invest
• If the business you invest in fails, you are likely to lose 100% of the money you invested. Most unlisted early stage companies fail.
2. 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 here.
• 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 FOS protection here.
3. You won’t get your money back quickly
• 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 unlisted early stage companies, you should not expect to get your money back through dividends. Unlisted early stage companies rarely pay these.
4. 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.
5. The value of your investment can be reduced
• 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 unlisted early-stage companies 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’s website here.
EIS Illustration
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Minimum Investment £25,000
Adviser Fee (%)
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Gross Investment
£0.00
Net Subscription
£0.00
Adviser Fee: £0.00
Product Costs and Charges
£0.00
Initial Fee (2%): £0.00 AMC (2% × 2.75 yrs): £0.00
Custodian Fee (£80 × 6 yrs): £0.00
Dealing Commission (0.2%): £0.00 VAT (20%): £0.00
Balance to be invested into EIS qualifying companies
£0.00
as a % of Net Subscription: 0%
Expected Income Tax Relief on EIS Qualifying Investments (30%)
£0.00
Risk Warnings
This calculator is for illustrative purposes only. It does not constitute financial, tax, or investment advice, and should not be relied upon as such.
Tax relief is calculated on the amount invested into EIS qualifying companies, which is less than your net subscription due to fees. An estimate of this amount is shown above, but the actual amount of relief may vary depending on the exact amount deployed into whole shares of EIS companies.
EIS tax reliefs are also conditional on the investee companies maintaining their EIS qualifying status throughout the relevant holding period. There is no guarantee that qualifying status will be maintained.
The total fees payable, including any IFA fee, are deducted from your subscription before investment. Your net amount invested will therefore be lower than your gross subscription. Tax relief is calculated on the gross subscription, not the net amount invested, but you should be aware that fees will reduce the overall return on your investment.
Specific circumstances that fall outside the scope of this calculator may result in different levels of relief being available. You should seek independent financial and tax advice before making any investment decision.