What is a knowledge intensive company?

📘 Overview

Knowledge Intensive Companies (KICs) can raise more investment through venture capital schemes such as EIS, compared to standard companies.

This guide explains when and why you might apply as a KIC, the key differences, and the criteria you’ll need to meet.

💡 Should We Apply as a KIC?

You should consider applying as a KIC if:

• You need to raise more than the standard EIS investment limits allow.
• Your company is older than the usual EIS age limits.
• Your investors want to use the higher investment thresholds available to KICs.

To apply as a KIC, your company must:

• Be carrying out research, development, or innovation when shares are issued.
• Qualify under standard EIS rules.
• Meet the KIC-specific criteria (detailed below).
• Be within 10 years of your first commercial sale or have turnover exceeding £200,000, unless you are a spin-out from a university or research organisation.
• Be seeking investment above the standard EIS limits, but within the KIC thresholds.

🔍 What’s Different for KICs?

✅ Do We Qualify as a KIC?

To qualify, your company and any qualifying subsidiaries must:

• Have fewer than 500 full-time equivalent employees when shares are issued.

And either:

1. Be creating, preparing to create, or have created intellectual property (IP), with the expectation that most of your business income will come from that IP within 10 years.
   • If IP has already been created, it must have been developed within the last three years.

OR

2. Have at least 20% of full-time equivalent employees engaged in R&D for at least three years from the date of investment.
   • These employees must hold a Master’s degree or higher, and their roles must require that level of qualification.

🔍 Operating Costs Conditions

Your company must spend a minimum portion of its operating costs on research, development, or innovation (RDI):

• At least 15% of operating costs on RDI in any one of the three years before investment, or
• At least 10% of operating costs on RDI each year for three consecutive years.

If your company is three years old or more, these conditions must have been met in the three years before the investment.

If your company is less than three years old, you must plan to meet these thresholds in the three years after the investment and provide a supporting schedule with evidence.

💡 How to Apply for KIC Status

You can apply for KIC status in one of two ways:

1. Advance Assurance

   • HMRC may confirm KIC status during your advance assurance application — but only if you’re seeking investment beyond the standard EIS limits.

     EIS1 Compliance Statement

   • You can also confirm KIC status when submitting your EIS1 form after shares are issued.
   • The form includes a specific section to declare your company as knowledge-intensive.

🔗 HMRC guidance: Venture Capital Schemes Manual (KIC criteria)

💬 Need Help?

The eligibility criteria for both EIS and KICs can be complex and depend on your company’s structure, activity, and funding history.

💡 Don’t hesitate to contact us before issuing shares or submitting your application — our advisors can review your circumstances and guide you through the process.