The Enterprise Investment Scheme (EIS) helped 3,735 UK companies raise £1,575 million in 2024-25.
Companies that outgrow the standard rules can use a second route: knowledge intensive company status. It allows larger raises, a longer funding window and a higher headcount, and it opens a higher annual limit for investors.
This guide covers the EIS benefits and criteria, the current limits and how to apply.
What Is a Knowledge Intensive Company Under EIS?
A knowledge intensive company (KIC) is an Enterprise Investment Scheme company that carries out research, development or innovation and meets extra HMRC conditions in return for higher funding limits.
The definition sits in section 252A of the Income Tax Act 2007, and a KIC must still meet the normal EIS conditions.
The status is optional. HMRC says you only need to apply as a KIC if you need to raise more than the usual scheme limits allow, your company is older than the usual limits allow, or your investor wants the higher investor limits.
A round inside the standard limits and age window can go ahead under ordinary EIS.
EIS Benefits and Criteria
KIC status gives a company a 10-year funding window, a higher headcount cap and bigger raising limits than standard EIS.A standard EIS company can take investment within 7 years of its first commercial sale, with limited exceptions.
A KIC gets 10 years, counted from its first commercial sale or from the date its annual turnover reached £200,000, whichever the company chooses.
The employee cap rises from fewer than 250 full-time equivalent employees to fewer than 500.
Investors gain as well. An individual can claim 30% income tax relief on up to £1 million of EIS investment a year, or on up to £2 million if at least £1 million goes into KICs, and must hold the shares for at least three years to keep the full relief.
HMRC’s May 2026 statistics recorded 55 investments of between £1 million and £2 million in 2024-25, worth £93 million in total. The higher investor limit only helps if the company qualifies, so these EIS benefits and criteria have to be read together.
EIS Knowledge Intensive Limits From April 2026
Most knowledge intensive companies can raise £20 million in any 12 months and £40 million in their lifetime on shares issued from 6 April 2026. The EIS knowledge intensive limits doubled on that date, and standard companies saw the same increase.
Many guides still quote the old £10 million and £20 million KIC figures, which applied before 6 April 2026. Two further points affect real round sizes. The limits count money from other venture capital schemes and risk-finance state aid, plus amounts raised by subsidiaries, so earlier raises reduce your headroom.
Specified companies, broadly Northern Ireland businesses trading in goods, stay on £10 million a year and £20 million in their lifetime even as KICs.
We would size a round against the standard limits first and treat KIC status as the route beyond them.
Knowledge Intensive Company Criteria: The Conditions HMRC Tests
To qualify, a company needs fewer than 500 full-time equivalent employees, must pass an R&D operating costs test and must meet either the innovation condition or the skilled employees condition.
- Operating costs test: the company spends at least 10% of its relevant operating costs on research, development or innovation in each of three years, or at least 15% in one of them. A company aged three or older looks back over the three years before the investment. A younger company looks forward over the three years after it and sends HMRC a schedule backed by accounts.
- Innovation condition: the company is working to create intellectual property and can reasonably expect most of its business to come from using it within 10 years. Intellectual property that already exists must have been created in the preceding three years.
- Skilled employees condition: at least 20% of full-time equivalent employees are skilled at the time of investment and for the following three years. A skilled employee works directly in R&D or innovation, holds a Master’s degree or above, and holds a job that requires that qualification.
Relevant operating costs come from the profit and loss account, including cost of sales but excluding depreciation, amortisation and exceptional items. HMRC’s own example of a skilled-employee miss is a PhD chemist working as a lab technician in a job that does not need the degree.
These knowledge intensive company criteria sit on top of the normal EIS conditions, including a qualifying trade and the risk to capital condition.
Which UK Startups Qualify as Knowledge Intensive Companies?
A startup qualifies by meeting the knowledge intensive company criteria on R&D spending and either intellectual property or skilled staff, and those criteria name no sector.
Eligibility therefore comes down to evidence.
A company with Master’s-qualified researchers in R&D roles can meet the skilled employees condition, and a company creating intellectual property that it expects to drive most of its business within 10 years can meet the innovation condition. Either way, the operating costs test applies.
The normal EIS rules still apply: a UK permanent establishment, a qualifying trade, the risk to capital condition, and money spent within two years without buying another business.
Applying for KIC Status Through Advance Assurance
Advance assurance lets you ask HMRC if a raise is likely to qualify, but HMRC only gives an opinion on KIC status when you need more than the usual limits.
Check your target against the EIS knowledge intensive limits and the standard limits before you apply, because a round inside the standard limits gets no KIC opinion.
You need a separate application for each proposed investment and will usually give HMRC details of your potential investors, along with your business plan, financial forecasts and latest accounts.
HMRC says advance assurance is not a wider endorsement of the company.
The formal step comes after the shares are issued. The company files an EIS1 compliance statement with evidence of its KIC status, which it can submit once it has carried out its qualifying activity for four months. If HMRC agrees, it sends a unique investment reference and EIS3 certificates that investors use to claim relief.
The company must follow the scheme rules for at least three years and tell HMRC within 60 days if it stops meeting them.
HMRC received 3,310 EIS advance assurance applications in 2025-26, and 72% had been approved by March 2026, with some still being processed.
FAQs
1. How do you qualify as a knowledge intensive company?
You qualify by meeting the normal EIS conditions, having fewer than 500 full-time equivalent employees, passing an R&D operating costs test and meeting either the innovation or the skilled employees condition. The operating costs test needs 10% of operating costs spent on R&D in each of three years, or 15% in one.
2. How much can a knowledge intensive company raise under EIS?
Most knowledge intensive companies can raise £20 million in any 12 months and £40 million in their lifetime on shares issued from 6 April 2026. Specified companies, broadly Northern Ireland businesses trading in goods, stay at £10 million and £20 million. The totals include money from other venture capital schemes and risk-finance state aid.
3. Can a software company be a knowledge intensive company?
A software company can qualify if it meets the HMRC conditions, which cover R&D spending, intellectual property and skilled staff and name no sector. It must still run a qualifying trade and meet the normal EIS rules, including the risk to capital condition.
Also Read: Can Family Office Investors Claim SEIS and EIS Relief on a Startup Fundraise?
Sources: HMRC GOV.UK guidance on the Enterprise Investment Scheme, knowledge intensive companies, advance assurance and investor tax relief; HMRC Venture Capital Schemes Manual (VCM8162 to VCM8168, VCM12032 and VCM12033); HMRC EIS and SEIS statistics (May 2026); Income Tax Act 2007, sections 252A and 252B. Figures reflect the most recent available data at the time of writing. This guide is general information, not tax advice.
The EP+ Editorial Desk covers UK startups, founder stories, and venture capital. All editorial content is independently produced and human-reviewed before publication.
