SEIS and EIS

SEIS

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

EIS

Like SEIS, this scheme helps your company raise funds by offering tax reliefs to individual investors. It is designed to help you grow your business.

With both schemes, there are rules that must be followed so that your investors can claim and keep the tax reliefs relating to their shares.

The shares issued must meet the same requirements under both schemes. They must be paid up in full, in cash, on issue and must be full risk ordinary shares which

• are not redeemable
• carry no special rights to your assets
   

Risk-to-capital condition

This applies to both schemes. HM Revenue and Customs (HMRC) need an explanation of how the investment in your company meets the condition, which means:

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

How the schemes work

SEIS

• you can receive a maximum of £250,000
• this maximum will include any other de minimis state aid received in the 3 years up to and including the date of the investment, and
• counts towards any limits for later investments through other venture capital schemes
   

EIS

• you can raise up to £5m each year, and a maximum of £12m in your company’s lifetime, including amounts raised under other venture capital schemes

• your company must receive initial investment under the scheme within 7 years of its first commercial sale

• special rules apply to knowledge-intensive companies that extend time and investment limits

Tax reliefs will be withheld, or withdrawn, from your investors if you do not follow the scheme rules for at least 3 years after the investment is made.

Advance assurance

You can ask HMRC if your share issue is likely to qualify before you go ahead.  We can help you with this process. The wording of the risk-to-capital condition narrative is particularly important and we have a track record of getting this right.

Compliance

When you’ve issued your shares, you must complete a compliance statement. Again, we can help you with this process.

Next steps to check your eligibility

If you would like to know more about EIS and SEIS, call TaxAssist Accountants Marylebone Station today on 020 3409 5611 or use our simple online form.