Is Your Startup A Knowledge Intensive Company?

February, 2026
Estimated Reading Time: 3 minutes

Through the Enterprise Investment Scheme (“EIS”) investors are rewarded with an array of tax reliefs as an incentive to invest in early-stage, growing businesses. The objective of the EIS is to prompt the development of businesses that have innovation as their core focus, so as to grow the economy of the United Kingdom as a whole. Under the EIS, companies that are ‘knowledge-intensive’ are eligible for additional assistance, such that they can raise greater capital, for a greater amount of time as compared to other EIS eligible businesses, to account for the inherent risk that comes with financing (and operating) an innovative business. If your startup is in the process of developing a product, or raising capital so as to fund the development of one, you may qualify as a knowledge-intensive company (“KIC”).

WHAT IS A KNOWLEDGE INTENSIVE COMPANY?

A KIC is an innovation-driven business, which invests heavily in research and development, creates intellectual property, and employs highly skilled staff. If this criteria sounds like it may apply to your company, you would be able to raise up to £10 million per year through the Enterprise Investment Scheme (as opposed to £5 million for standard companies) and up to £20 million overall (whereas the EIS limit is £12 million).

WHAT ARE THE BENEFITS OF BEING CLASSED AS A KNOWLEDGE INTENSIVE COMPANY?

An investor in a KIC can recoup a greater amount in EIS tax reliefs than one who invests in ordinary EIS-eligible companies. Generally, an individual would be able to claim EIS tax relief on a maximum amount of £1 million per tax year – however, in the event that they were to invest £1 million in KICs, an investor would have the ability to claim EIS reliefs on £2 million per tax year across various startups that are EIS eligible.

Moreover, KICs can employ up to 500 full time employees, whereas other EIS-eligible companies can have a maximum of 250 employees. This means that provided your company is working towards innovation, you can have more hands on deck than other EIS qualifying companies whilst continuing to qualify for the scheme.

As such, it is in the interests of both investors and companies to seek KIC status in the event that a company meets the qualifying criteria, which are explored in greater detail below.

WHAT ARE THE CRITERIA THAT A COMPANY HAS TO MEET IN ORDER TO BE CLASSIFIED AS A KNOWLEDGE INTENSIVE COMPANY?

Criteria What needs to be demonstrated?
R&D/Innovation
  • At least 15% of the company’s operating costs must be spent on research and development, as well as innovation, in at least one of the previous three years, OR
  • At least 10% of operating costs were spent on research and development/innovation in each of the previous three years.
Skilled Employees
  • At least 20% of the company’s employees must be directly involved in the research and development being carried out, and are required to hold a Master’s or PhD degree that is relevant to the research and development and/or innovation being carried out by the company.
  • The work that the aforementioned employees carry out must be related to their field of academic expertise.
Age
  • The Company must have made its first ‘commercial sale’ (which includes installing an app on an app store) less than 10 years ago.
  • Alternatively, in recognition of the fact that companies that make substantial investments in intellectual property take longer than others to become profitable, KICs whose turnover exceeded £200,000 less than 10 years ago will still qualify to raise investment under the Enterprise Investment Scheme.
Size
The company must have fewer than 500 full-time equivalent employees.
IP Creation
The company must be creating, or be in the process of creating intellectual property from which it will derive the majority of its revenues within 10 years.

How Buckworths Can Help
As the UK’s only law firm working exclusively with startups and high growth businesses, getting eligible companies KIC status, and the SEIS/EIS application process more broadly, is a process which Buckworths has comprehensive experience in. We offer expert advice to clients on KIC qualification, and have particular expertise in navigating more complex applications. Given the myriad benefits explored above that KIC status offers, qualifying as a KIC is most certainly worth it – but many applications are rejected by HMRC on account of a failure to properly spot and confront complexities. To ensure that you get the right professional advice, reach out to us by calling 020 7952 1723, or emailing [email protected].

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