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  • 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:

    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

    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
    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!