Ideal for Tech and other start ups, The Seed Enterprise Investment Scheme (SEIS) and Enterprise Investment Scheme (EIS) helps you to attract funding from investors.

These schemes offer generous tax relief to investors who are willing to put their faith and money into these ambitious companies.

To be eligible:

• Trade must be less than 2 years under SEIS or 7 years under EIS
• Company must have less than 25 employees under SEIS or 250 employees for EIS
• Company must have no more than £200,000 gross assets or £15m for EIS
• Company must not be a member of a partnership under a SEIS

SEIS

SEIS is designed to help your company raise money when it is starting to trade. It does this by offering tax reliefs to individual investors who buy new shares in your company.

You can receive a maximum of £150,000 through SEIS investments. This will:

• include any other de minimis state aid received in the 3 years up to and including the date of the investment
• count towards any limits for later investments through other venture capital schemes

There are various rules you must follow so your investors can claim and keep SEIS tax reliefs relating to their shares.

Tax reliefs will be withheld, or withdrawn, from your investors if you do not follow the rules for at least 3 years after the investment is made.

Companies that can use the scheme

Your company can use the scheme if it:

• carries out a new qualifying trade
• is established in the UK
• is not trading on a recognised stock exchange at the time of the share issue
• has no arrangements to become a quoted company or a subsidiary of one at the time of the share issue
• does not control another company unless that company is a qualifying subsidiary
• has not been controlled by another company since the date of your company being incorporated

If you’ve received investment through the Enterprise Investment Scheme (EIS) or from a venture capital trust, you cannot use SEIS.

About the investment

The shares you issue must meet the same requirements as shares issued under EIS.

The money you raise from the investment must be spent within 3 years of the share issue. You must spend the money on either:

• a qualifying trade
• preparing to carry out a qualifying trade
• research and development that’s expected to lead to a qualifying trade

You cannot use the investment to buy shares, unless the shares are in a qualifying 90% subsidiary that uses the money for a qualifying business activity.

New qualifying trade

If your company is already carrying out a qualifying trade, it must not have been carried out for more than 2 years by either:

• your company
• any other person who then transferred it to your company

Your company, or any qualifying subsidiary, must not have carried out any other trade before you started the new trade.

Your company’s trade must be treated as a commercial business with the aim of making profits. However, your trade will not qualify if it consists mostly of an excluded activity.

EIS

How the scheme works

EIS is designed so that your company can raise money to help grow your business. It does this by offering tax reliefs to individual investors who buy new shares in your company.

Under EIS, you can raise up to £5 million each year, and a maximum of £12 million in your company’s lifetime. This also includes amounts received from other venture capital schemes. Your company must receive investment under a venture capital scheme within 7 years of its first commercial sale.

You must follow the scheme rules so that your investors can claim and keep EIS tax reliefs relating to their shares. Tax reliefs will be withheld or withdrawn from your investors if you do not follow the rules for at least 3 years after the investment is made.

What money raised can be used for

The money raised by the new share issue must be used for a qualifying business activity, which is either:

• a qualifying trade
• preparing to carry out a qualifying trade (which must start within 2 years of the investment)
• research and development that’s expected to lead to a qualifying trade

The money raised by the new share issue must:

• be spent within 2 years of the investment, or if later, the date you started trading
• not be used to buy all or part of another business
• pose a risk of loss to capital for the investor
• be used to grow or develop your business

Companies that can use the scheme

Your company can use the scheme if it:

• has a permanent establishment in the UK
• is not trading on a recognised stock exchange at the time of the share issue and does not plan to do so
• does not control another company other than qualifying subsidiaries
• is not controlled by another company, or does not have more than 50% of its shares owned by another company
• does not expect to close after completing a project or series of projects

Your company and any qualifying subsidiaries must:

• not have gross assets worth more than £15 million before any shares are issued, and not more than £16 million immediately afterwards
• have less than 250 full-time equivalent employees at the time the shares are issued

Your company must carry out a qualifying trade. If you’re part of a group, the majority of the group’s activities must be qualifying trades.

Risk to capital condition

The investment in your company must meet the risk to capital condition, which means:

• your company must use the money for growth and development
• the investment should be a risk to the investors capital

Growth and development means you’ll use the investment to grow things like your revenue, customer base and number of employees.

The growth and development of your company should be permanent and not rely on the investor’s continued support.

The investment should carry a risk that the investor will lose more capital than they are likely to gain as a net return.

How we can help

If you have not got advance assurance talk to our experts, you must provide the following information for your company and its subsidiaries which we can help you with:

• the business plan and financial forecasts
• a copy of the latest accounts
• an explanation of how you meet the risk to capital condition
• details of all trading and activities to be carries out, and how much you expect to spend on each activity

Our qualified team of business advisors will guide you throughout your SEIS and EIS application journey from preparation of the business plan to financial forecasts and ensure you meet the obligations of HMRC advance assurance requirements.

Speak to one of our representatives today or complete the form below and we will call you.