fbpx

Knowledge Intensive Companies (“KICs”)

Author

Andy Wood

Andy is a practical, creative tax adviser who assists a variety of clients in achieving their personal and commercial objectives in the most tax efficient manner.

Knowledge Intensive Companies (“KICs”) – Background

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?

Qualifying as 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:

ConditionDescription
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

Benefits of being a KIC

As stated above, there are rewards that flow from satisfying the criteria. These are as follows:

LimitNormalEnhanced for KIC
Annual limit£5m£10m
Lifetime limit£12m£20m
Investment timings (7 years from)First commercial saleAnnual 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!

 

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

By continuing to use the site, you agree to the use of cookies. more information

The cookie settings on this website are set to "allow cookies" to give you the best browsing experience possible. If you continue to use this website without changing your cookie settings or you click "Accept" below then you are consenting to this.

Close