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:
|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:
|Limit||Normal||Enhanced for KIC|
|Investment timings (7 years from)||First commercial sale||Annual turnover exceeds £200k|
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!