If you’re looking to take advantage of hefty tax breaks under the government’s enterprise investment scheme (EIS) then time may be running out. Advisers are expecting a lot fewer EIS opportunities once new qualifying restrictions come into force this summer.

In March’s budget, chancellor Gordon Brown said only companies with fewer than 50 employees would now qualify for the EIS scheme. This new restriction is due to come into force when the Finance Bill 2007 gets royal assent, currently scheduled for 24 July.

Neil Pamplin, client service director at accountants Grant Thornton, says: ‘Time is running out for EIS investments as the number of companies and possibly the quality of companies that qualify will be limited after July.’

Pamplin adds that any companies thinking of raising money under an EIS scheme are likely to bring plans forward, meaning the traditionally quiet summer months could generate a sudden surge of opportunities for investors.

Many of the smaller companies that float on Aim tend to come with an EIS-approved stamp on their admission documents. This means that HM Revenue & Customs has confirmed the shares attract the generous EIS tax breaks.

Designed to attract investment into fledgling companies, the scheme allows 20% relief from income tax. So someone investing £25,000, say, need only contribute £20,000, with the government making up the other £5,000 from that individual’s income tax bill.

Investors can also defer paying capital gains tax – for instance a £5,000 liability would effectively reduce the contribution in the above example to £15,000. That liability then gets the enhanced taper relief available on Aim, cutting it by 75% after two years.

Together with the 50 employees limit, the Finance Bill 2007 will also introduce a new limit on the amount of money a company can raise via tax schemes like EIS to £2 million in every 12 months.