How to Handle Enterprise Innovation Scheme (EIS) in Tax Savy?

When it comes to tagging enhanced deductions or allowance for Enterprise Innovation Scheme (EIS) — there are a few things you’ll want to keep in mind to get it right. Let’s walk through it step by step.

🧐 First, Ask Yourself a Few Quick Questions:

Before you start tagging away, pause for a sec and check:

• Is the amount in your Detailed P&L a mix of qualifying and non-qualifying expenses?
• What kind of qualifying expense are we talking about?
  • Is it IP registration?
  • Or R&D-related?
• And here’s the big one: Does the qualifying portion exceed $400,000?

Tag It Right: Two Common Scenarios

✅ Scenario 1: Both Qualifying & Non-Qualifying expenses

If your line item in the Detailed P&L includes both qualifying and non-qualifying stuff, you’ll want to break it down:

• Use a Partial or Full Breakdown Schedule to show what portion is actually eligible
• Under Tax Adjustment, select "Further Deduction"
• Tag the line to automatically create a new Further Deduction Schedule

✅ Scenario 2: All Qualifying

If the amount is fully qualifying, it’s even easier:

• Just select "Further Deduction" directly under Tax Adjustment
• Tag it to spin up a new Further Deduction Schedule

📊 Applying the Deduction % and Expense Cap

Depending on the type of expense, the % deduction and cap might change a little.

📌 For IP Registration:

• Just tag it to a Further Deduction Schedule
• Simply apply a 300% deduction and an expense cap of $400,000

🔬 For R&D Expenses:

There are two alternatives, depending on the amount of qualifying expenses.

1. If it’s $400,000 or less:
   • Tag it & create one Further Deduction Schedule.
   • Apply a full 300% deduction on the qualifying amount.
2. If it’s more than $400,000:
   • You’ll need two schedules:
     • One for the addition portion, where you also apply a 150% deduction, but with no cap.
     • Another for the enhanced portion, where you apply a 150% enhanced deduction (with a $400,000 cap).

For a clear overview of the steps, check out the flowchart below — it maps everything out so you can see how the process flows at a glance.