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When investors sell EIS shares, any growth in value from an investment is 100% tax-free. Which is worth noting because small, early-stage companies have the potential to grow significantly. To qualify for this relief, income tax relief must have already been claimed – and not withdrawn by HMRC.

Companies will issue shares to you for the amount you invest. You need to hold those shares for at least four years. EII is available to qualifying individuals who make qualifying investments. You will qualify if you, or your family, do not own any capital in the company.

You have to be earning more than €40,000 a year to qualify for investing in an EII scheme as you must be paying the higher 40pc rate of income tax and have sufficient taxable income to avail of the tax relief.

How the scheme works. The scheme: offers tax reliefs to individual investors who buy new shares in your company. helps your company to raise money and grow its business ― up to £5 million each year and a maximum of £12 million in your company's lifetime.

Companies that qualify for EIS funding It's important that funding is directed to those who need it most. For starters, they must be trading businesses. They also have to be unquoted, so they can't be listed on any stock exchange. However, they can be listed on AIM, which is considered unquoted in this case.

The Employment and Investment Incentive Scheme (EIIS) provides tax relief to private investors for risk capital investments in qualifying SMEs, to assist companies to raise finance to allow them to expand and create or retain jobs.