How a Knowledge Intensive EIS Fund Works

Author: Hugo Vaux
Last updated: March 2026

This guide is for educational purposes only and does not constitute tax or investment advice. Tax treatment depends on individual circumstances and may change. Investors should consult their tax adviser before making decisions.

This article explains what qualifies as a Knowledge Intensive Company, how the tax reliefs work, the role of an HMRC-approved fund, and how features such as carry back and capital gains deferral apply.

What is a Knowledge Intensive EIS Fund?

A Knowledge Intensive EIS fund is a specialist version of the Enterprise Investment Scheme designed to channel capital into some of the UK’s most innovative, research-driven businesses.

Often referred to as a KI EIS fund or EIS KIC fund, it combines established EIS tax reliefs with extended eligibility rules for Knowledge Intensive Companies (KICs).

For investors seeking higher annual investment limits, simplified administration and exposure to high-growth UK innovation, understanding how a Knowledge Intensive EIS fund works is essential.

 

What is a Knowledge Intensive Company (KIC)?

A Knowledge Intensive Company (KIC) is a business that meets specific HMRC criteria demonstrating a strong focus on innovation and intellectual property.

To qualify, companies typically need meaningful research and development activity, a clear intention to create and commercialise intellectual property, and a workforce made up of highly skilled employees engaged in innovation.

Because these businesses often take longer to scale, HMRC allows more flexibility than under standard EIS. KICs can be up to 10 years old (rather than 7), can employ up to 500 people, and can raise more capital over their lifetime. These extended thresholds are what underpin the Knowledge Intensive EIS structure.

 

Knowledge Intensive EIS tax reliefs explained

A Knowledge Intensive EIS fund offers the same core tax benefits as standard EIS, with enhanced annual allowances when investing in KICs.

Income tax relief

Investors can claim 30% income tax relief on qualifying investments. This can be applied to the current tax year, or through EIS carry back, to the previous tax year.

The standard EIS limit is £1 million per year. When investing in knowledge intensive companies, this increases to up to £2 million, provided any amount above £1 million is allocated to KICs.

EIS carry back relief

Carry back relief allows an investment to be treated as if it were made in the previous tax year, subject to unused allowance. This can be particularly useful for investors with prior year tax liabilities or fluctuating income. For Approved Funds, the relevant date for carry back is the date the fund closes for new subscriptions.

Capital gains tax benefits

Knowledge Intensive EIS offers a number of capital gains tax advantages. Investors can defer gains from the disposal of other assets by reinvesting into EIS shares. In addition, if income tax relief has been claimed and shares are held for at least three years, any growth in value may be free from capital gains tax.

Loss relief

If an investment is realised at a loss, that loss may be offset against income or capital gains, helping to reduce the effective downside exposure.

Inheritance tax relief

EIS investments may qualify for Business Relief after two years, meaning they can fall outside of an investor’s estate for inheritance tax purposes, subject to legislation and individual circumstances and limits.

 

What is an HMRC-approved Knowledge Intensive EIS fund?

An HMRC-approved Knowledge Intensive EIS fund must meet specific conditions relating to how capital is deployed and how the portfolio is constructed.

One of the key advantages of this structure is simplicity for investors.

A single EIS5 certificate

Unlike standard EIS funds, where investors typically receive multiple EIS3 certificates, an approved Knowledge Intensive EIS fund issues a single EIS5 certificate. This allows investors to make one consolidated income tax relief claim.

Greater tax year certainty

For income tax purposes, shares are treated as issued on the fund’s closing date, provided HMRC conditions are satisfied. This can make it easier to plan relief and carry back elections with greater certainty.

Risks to consider

Knowledge Intensive EIS investments are high risk and illiquid. Capital is at risk and investors may lose some or all of their investment. Returns are not guaranteed.

Tax reliefs can help mitigate downside but do not remove risk entirely. These investments are typically long term in nature and are most suitable for investors who understand the risks of early-stage and scale-up businesses.

 

About the Guinness Knowledge Intensive EIS Fund

The Guinness Knowledge Intensive EIS Fund is an HMRC-approved fund that invests predominantly in qualifying knowledge intensive companies across the UK.

The fund seeks to build a diversified portfolio of scale-up businesses operating in sectors such as technology, healthcare, education, advanced manufacturing and consumer markets. Investments are selected through a structured due diligence process and approved by the Guinness Ventures Investment Committee.

For the 2025/26 tax year, the target fund size is £10 million, with a closing date of 2 April 2026. Capital is expected to be deployed over approximately 12 months following close, with an anticipated investment horizon of five years or longer.

As an approved Knowledge Intensive EIS fund, investors receive a single EIS5 certificate once deployment conditions are satisfied.

 

Summary

A Knowledge Intensive EIS fund combines 30% income tax relief with an increased annual investment allowance of up to £2 million, alongside capital gains deferral, potential tax-free growth, inheritance tax advantages and simplified administration through a single EIS5 certificate.

For investors seeking tax efficiency alongside exposure to innovative UK businesses, it provides a structured route into knowledge intensive company investing.

 

Frequently asked questions

What is a Knowledge Intensive EIS fund?

A Knowledge Intensive EIS fund is a type of Enterprise Investment Scheme fund that invests primarily in knowledge intensive companies (KICs). These are businesses focused on innovation, research and development, and intellectual property, while offering investors access to EIS tax reliefs and higher annual investment limits.

What is the difference between EIS and Knowledge Intensive EIS?

The main difference is that Knowledge Intensive EIS allows higher investment limits and supports companies with longer growth cycles. Investors can invest up to £2 million per year, provided at least £1 million is allocated to knowledge intensive companies, compared to £1 million under standard EIS.

What tax relief do you get with Knowledge Intensive EIS?

Investors can receive 30% income tax relief, capital gains tax deferral, potential tax-free growth after three years, loss relief, and inheritance tax relief after two years, subject to qualifying conditions.

What is a Knowledge Intensive Company (KIC)?

A Knowledge Intensive Company is a business that meets HMRC criteria relating to research and development, intellectual property creation, and skilled employees. These companies often operate in sectors such as technology, healthcare, and advanced manufacturing.

What is an EIS5 certificate?

An EIS5 certificate is issued by an HMRC-approved EIS fund and allows investors to claim income tax relief using a single certificate, rather than receiving multiple EIS3 certificates from individual investments.

Can you carry back Knowledge Intensive EIS investments?

Yes, investors can use EIS carry back relief to treat an investment as if it were made in the previous tax year, subject to available allowance and HMRC rules.

 

Important information

This article is for information purposes only and does not constitute investment advice. Tax reliefs depend on individual circumstances and may change. Investors should seek independent financial and tax advice before making any investment decision. Capital is at risk.