Are you seeking investment to kickstart your startup or bolster your small business? The Seed Enterprise Investment Scheme (SEIS) and the Enterprise Investment Scheme (EIS) are valuable tools to attract investors and turn your business dreams into reality.

 
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SEIS - Seed Enterprise Investment Scheme

SEIS is tailor-made to assist your company in raising capital during its initial trading phase. It accomplishes this by offering tax incentives to individual investors who purchase shares in your company.

EIS - Enterprise Investment Scheme

Similar to SEIS, EIS is a scheme aimed at raising funds for your company by providing tax benefits to individual investors. Its primary goal is to support the growth of your business.

Both schemes come with specific guidelines that must be adhered to so that your investors can claim and maintain the tax benefits associated with their shares.

The shares issued must meet identical requirements under both schemes. They must be fully paid in cash upon issuance and must be ordinary shares with the following characteristics:

  • They are not redeemable.
  • They confer no special rights to your company's assets.

Risk-to-Capital Condition

This condition applies to both SEIS and EIS. HM Revenue and Customs (HMRC) requires an explanation of how the investment in your company satisfies this condition, which implies:
  • Your company must allocate the raised funds for growth and development.
  • The investment should entail the risk that the investor might lose more capital than they stand to gain as a net return.

How the Schemes Operate

SEIS

  • You can attract a maximum investment of £150,000.
  • This maximum amount includes any other de minimis state aid received in the three years leading up to and including the date of the investment.
  • It counts towards any limits for subsequent investments through other schemes.
EIS
  • You can raise up to £5 million each year and a maximum of £12 million throughout your company's lifetime, including amounts raised under other schemes.
  • Your company must secure investment under the scheme within seven years of its first commercial sale.
  • Special rules apply to knowledge-intensive companies that extend time and investment limits.
Tax reliefs for your investors may be withheld or revoked if you fail to adhere to the rules for a minimum of three years after the investment is made.
Advance Assurance
Before proceeding, you can seek assurance from HMRC to determine if your share issue is likely to qualify. We can assist you with this process, particularly in crafting the risk-to-capital condition narrative, a critical element where we have a successful track record.
Compliance
After issuing shares, you must complete a compliance statement. Once again, we can guide you through this process.
Next Steps to Verify Your Eligibility
If you’re eager to learn more about SEIS and EIS and how they can benefit your business, don’t hesitate to contact us today. We at Belmont Accounting Services are here to assist you on your journey to attracting investment and achieving your business goals.