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What does the EIS tax break apply to?

The EIS (Enterprise Investment Scheme) tax break refers to a subscription of shares in a said scheme being offset against one's income tax.

The Enterprise Investment Scheme (EIS) is designed to help smaller higher-risk trading companies to raise finance by offering a range of tax reliefs to investors who purchase new shares in those companies. Before 6 April 2011 relief was at 20 per cent of the cost of the shares, and before 6 April 2012 there was a minimum investment of £500.

Relief can be claimed up to a maximum of £1,000,000 invested in such shares, giving a maximum tax reduction in any one year of £300,000 providing you have sufficient Income Tax liability to cover it.

It is not applicable to offset against dividend income.