Seed Enterprise Investment Scheme
The Government is keen to encourage private individuals to invest in new and growing business ventures. Many companies in their formative stages struggle to find investment capital and the introduction of Seed Enterprise Investment Scheme (SEIS) in 2012 was the Government’s attempt at finding a solution to this problem for businesses that are often deemed too small for the full Enterprise Investment Scheme.
In 2012 the Government introduced the Seed Enterprise Investment Scheme to help attract investors to such qualifying businesses. This is a more generous version of the EIS already in place for equity financing and is designed for businesses seeking to raise more modest investment capital. For both schemes there is an upper limit of 30% of the total share capital of the company that an individual investor (and their connected parties) can hold.
Below you can see the current benefits available to investors:
|Maximum investment by individual||£100k||£1m|
|Income tax relief given||50%||30%|
|CGT exemption given on sale of shares after held for 3 years||Yes||Yes|
|Ability to roll over gains arising within tax year into investment (or carry back investment into previous year’s gain)||Yes||Yes|
One of the key advantages offered under the SEIS scheme is that Capital Gains being merely rolled over against SEIS qualifying shares are partially exempted from tax, rather than purely creating the deferral that would be obtained under EIS. 50% of the reinvested gain is exempt from CGT with the balance available for rollover
A company raising funds under SEIS can also raise funds under EIS once 70% of the funds raised under SEIS have been spent. Companies that have previously claimed EIS or received investment from a VCT are not eligible for SEIS.
The business offering the shares needs to have the following criteria:
|UK unquoted trading company||Yes||Yes|
|Number of employees||Less than 25||Less than 250|
|Gross assets||Less than £200k||Less than £15m|
|Maximum funding allowable||Up to £150k new shares||Up to £5m new shares|
As with all fund raising the complications are in the detail of matching the correct funds with the right venture, which is where the partners of Beavis Morgan have the experience to assist.
- Seed Enterprise Investment Scheme
- Research and Development
- Patent Box
- Creative Sector Tax Reliefs
- Enterprise Management Incentive ("EMI") Options and Entrepreneurs' Relief
- Capital Allowances: Integral Features