A Knowledge Intensive Company is a favoured status under EIS. This is a relatively new concept and took effect from 6 April 2018. Where one meets the threshold then advantages are bestowed on that company. These are listed below.
But what is a Knowledge Intensive Company?
In order to satisfy the definition, one must pass through a ‘two-step’ process.
Firstly one must satisfy Condition A, which is essentially a pre-condition. If you don’t then your chances of qualification have evaporated.
If you do satisfy Condition A, then it is necessary to satisfy one or both of Condition B or C
The conditions are as follows:
| Condition | Description |
| A (Operating costs) | Either or both of:
• At least 15% of operating costs on R&D / innovation in any of the 3 previous years; or • At least 10% of the same in each of the 3 prev years |
| B (Innovation) | Both of:
• The Co or a subsidiary is engaged in creating intellectual property; and • Reasonable to assume that in 10 yrs the exploitation of this IP will form the greater part of the business |
| C (Skilled Employee) | • At least 20% of the FT workforce have a relevant higher education qualification (Masters) and directly engsaged in R&D / innovation |
As stated above, there are rewards that flow from satisfying the criteria. These are as follows:
| Limit | Normal | Enhanced for KIC |
| Annual limit | £5m | £10m |
| Lifetime limit | £12m | £20m |
| Investment timings (7 years from) | First commercial sale | Annual turnover exceeds £200k |
If you have any queries about EIS, whether as a potential investee company or investor, then please do get in touch.
Albeit, we can’t give you investment advice as we are not regulated by the Financial Conduct Authority – so please get that type of advice from someone who is!
