If it's fully tax deductible, then you simply don't pay tax on that amount (not reduce your payable tax by that). It saves you about a third of the money, but doesn't make it risk-free.

I was thinking about the EIS scheme. There's some explanation here: http://en.wikipedia.org/wiki/Enterprise_Investment_Scheme

I believe the most important part is this:

If EIS shares are disposed of at any time at a loss, such loss can be set against the investor's capital gains or his income in the year of disposal.

So basically, if you take a loss, you can deduct it against any other gains you have.

Exactly, so what it says is if you have 10.000 loss on share-A, and 10.000 capital gain on share-B, then you can set the loss against your gain and not pay tax on that 10k of income. I.e., purely for the share-A you still lose the 10.000 but gain a "tax credit" worth some % [whatever your rate is] of that. A common misunderstanding is that you'd get "tax credit" of 10.000, which you don't.