Seed Enterprise Investment Schemes (SEIS) and Enterprise Investment Schemes (EIS) are venture capital schemes designed to encourage investment in small or medium sized companies. SEIS are targeted at start-ups and very early stage (seed stage) companies whilst EIS are targeted at slightly larger and more mature companies.
An SEIS-EIS fund is a managed investment scheme that raises funds from individuals and institutions for the purpose of investing in a portfolio of EIS-SEIS eligible ventures with the anticipation of returning a profit to all those who invested.
As a business, these schemes are beneficial as they can make your company more attractive by offering a less risky investment opportunity to investors. Companies can raise up to £150,000 through SEIS and £12,000,000 through EIS.
As an investor, these schemes can offer potentially significant tax reliefs in relation to income tax, capital gains tax, inheritance tax and loss relief. For example, SEIS investors can invest up to £100,000 in any tax year and benefit from a 50% tax break and EIS investors can invest up to £1,000,000 in any tax year and benefit from a 30% tax break.
In order for a company to be eligible to offer such schemes, it must meet certain requirements in relation to:
- Type of trade
- Length of time the company has been trading
- Gross assets
- Number of employees
- Permanency of establishment in the UK
- Whether the company is in a partnership
In order for an investor to be eligible for tax reliefs, he/she must meet certain requirements in relation to:
- Employment/connection within the company
- Taxable status
- Length of time shares are held
- Number of shares held in the company
- Other financial arrangements
Eligibility for these schemes can be quite strict and there are requirement to be met not just at investment but also during the investment period. We can guide both companies and investors through the investment process.