In the latest episode of the EIS and VC Basics mini-series for The EIS Navigator, we discuss Knowledge Intensive EIS funds, sometimes called KI funds. These are still relatively new in the market, so it’s good to get a full explanation. Committed Capital has launched a few KI funds now, so we asked its Head of Business Development, Glen Stewart, on to explain them.
Glen covers all you need to know about KI funds and some things to be careful about when selecting one:
Glen gives a full picture, but those new to EIS may wish to watch episodes 115 and 116 for the basic structure and tax reliefs, too. Enjoy!
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Learn about the KI EIS funds on the HMRC website.
Read about the tax relief schemes for venture trusts on the HMRC website.
Check out the Committed Capital website
Contact Committed Capital by email [email protected] or telephone 020 7529 1350.
Glen Stewart, Head of Business Development at Committed Capital, has been raising capital for the best part of the last 20 years for businesses; utilising tax efficient investment wrappers such as Enterprise Investment Schemes and Venture Capital Trusts. During this time, he has raised capital for a number of diverse businesses and asset classes including multimedia, property, renewable energy and AIM-listed companies ranging from startups to well established and profitable companies. Prior to this, Glen spent the previous ten years at Coopers & Lybrand qualifying as a tax adviser, at PwC and Deloitte specialising in High Net Worth, Expatriate tax and cross border advice.
Q: What is a knowledge intensive company?
A knowledge intensive (KI) company must:
Q: Why do KI companies have higher investment limits than normal EIS companies?
The UK government sees KI companies as crucial for economic growth, productivity, and global competitiveness. They can raise up to £10 million per year (vs £5 million for regular EIS) and £20 million in their lifetime (vs £12 million). Investors can invest up to £2 million per year (vs £1 million for regular EIS). The aim is to direct private capital into innovative, R&D-intensive businesses.
Q: What is a knowledge intensive EIS fund?
It’s a fund investing in KI companies. It can be approved or unapproved by HMRC, although approved funds are preferred because:
Q: When do investors get income tax relief?
Treated as though the investment was made on the fund closing date, not when individual investments are made. For example, if the fund closes on 5 April 2026, income tax relief applies to tax year 2025/26 or the previous 2024/25. Actual relief is claimed when the investor receives the EIS5 certificate. Timing depends upon fund deployment and HMRC processing. Deployment in the market ranges from between 6 and 24 months.
Q: How does the EIS5 certificate work for claiming tax relief?
Investors receive one EIS5 certificate for all investments in the fund. Claim via self-assessment tax return. Can amend a previously submitted return using section 3, page 3 of the EIS5 certificate. For PAYE taxpayers, a PA coding notice adjustment can be requested using the same section.
Q: How do KI funds affect other EIS tax reliefs?
Loss relief and CGT deferral operate the same as regular EIS funds. CGT deferral is based upon the date shares are subscribed in the underlying companies, not the fund closing date. Investors with a time-sensitive CGT window must watch deployment times.
Q: What are the advantages of KI funds for advisers and investors?
Q: Are there any disadvantages of KI funds?
May not suit time-sensitive CGT deferral investors because funds deploy capital only after the fund closes, potentially missing critical windows.
Please note this podcast/interview does not constitute a financial promotion and is provided for informational purposes and should not be construed as an invitation or offer to buy or sell any investments. Please be aware that investments into unquoted companies are high risk, long term and illiquid investments. Your capital is at risk. Past performance is not a reliable indicator of future performance. Target returns are not guaranteed and forward looking statements are illustrative only and must not be relied upon. Investors should only invest on the basis of reading the full offer documentation. Listeners must make their own independent decisions and obtain their own independent advice regarding any information, projects, securities, tax treatment or financial instruments mentioned herein.
