Seed Enterprise Investment Scheme (SEIS):Unlocking Investment Potential with the Seed Enterprise Investment Scheme
Encouraging private individuals to invest in emerging business ventures has always been a priority for the government. Recognising the struggles faced by nascent companies in securing investment capital, the introduction of the Seed Enterprise Investment Scheme (SEIS) in 2012 aimed to provide a solution. This initiative targets businesses that often fall under the radar of the comprehensive Enterprise Investment Scheme (EIS) due to their smaller scale.
Empowering Investment through SEIS
In 2012, the Government launched the Seed Enterprise Investment Scheme, a more generous iteration of the existing EIS for equity financing. Tailored to businesses seeking more modest investment capital, SEIS attracts investors to qualifying enterprises. Both schemes impose an upper limit of 30% on the total share capital that an individual investor and their connected parties can hold.
Explore the current advantages awaiting investors under SEIS and EIS:
| Scheme | Maximum Investment by Individual | Income Tax Relief | CGT Exemption on Share Sale After 3 Years | Roll Over Gains Within Tax Year |
|---|---|---|---|---|
| SEIS | £100k | 50% | Yes | Yes |
| EIS | £1m | 30% | Yes | Yes |
To be eligible for the benefits of SEIS and EIS, the business issuing the shares must meet the following criteria:
| Scheme | UK Unquoted Trading Company | Number of Employees | Gross Assets | Maximum Funding Allowable |
|---|---|---|---|---|
| SEIS | Yes | Less than 25 | < £200k | Up to £150k new shares |
| EIS | Yes | Less than 250 | < £15m | Up to £5m new shares |
Harnessing the SEIS Advantage
One significant advantage of the SEIS scheme is that Capital Gains Tax (CGT) on SEIS qualifying shares is not only deferred but also partially exempted. 50% of the reinvested gain enjoys CGT exemption, while the remainder can be rolled over.
A company that raises funds under SEIS can subsequently raise funds under EIS once 70% of the SEIS-raised funds have been utilised. It’s important to note that companies that have previously claimed EIS benefits or received investment from a Venture Capital Trust (VCT) are not eligible for SEIS.
Navigating the intricacies of fund raising requires expert guidance to align the right funds with the right venture. The seasoned partners at Beavis Morgan possess the experience to provide invaluable assistance in this regard.
Learn More
To delve deeper into the possibilities that SEIS can unlock for your business, we encourage you to get in touch with Steve Govey or your regular Beavis Morgan Partner. Together, let’s explore how SEIS can catalyse your investment journey.
