SEIS & EIS Information

SEIS & EIS SCHEMES

THE CASE FOR THE NEW INVESTOR

SEIS THE EXPERIENCED INVESTOR

SEIS THE YOUNG BUSINESS OWNER

The SEIS and EIS schemes offer significant tax benefits to Investors while simultaneously encouraging investment in UK small/early stage start-ups. The SEIS and EIS schemes have been designed to help boost economic growth in the UK through the promotion of entrepreneurship, and to help SMEs obtain funding which has previously been a struggle through other mediums such as bank loans.

Benefits of Investing in SEIS & EIS Qualifying Companies

The SEIS scheme has been designed to help boost economic growth in the UK through the promotion of entrepreneurship, and to help SMEs obtain funding which has previously been a struggle through other mediums such as bank loans.

The benefits of investing into an SEIS or EIS qualifying company include:

  • 50% Income Tax relief (SEIS).
  • Up to 14% Capital Gains relief.
  • Ability to ‘carry back’ your investment to the previous tax year.
  • Any gains on the disposal or sale of shares after a period of three years are also free from capital gains tax.
  • Should the business fail within the three year period the investor can also receive up to 45% loss relief, which can be offset against their Income Tax.

There are several criteria that businesses will need to meet in order to qualify as an SEIS business, and some trades are also excluded. For example the business must:

  • Be a UK registered company
  • Have fewer than 25 employees.
  • Assets less than £200,000
  • The business cannot be more than two years old.

  • Must be an unquoted company
  • No previous other risk capital scheme investments.
  • No previous SEIS, EIS or VCT investments made.

The EIS scheme offers significant tax benefits to Investors while simultaneously encouraging investment in UK small/early stage start-ups and growth seeking companies. The EIS scheme has been designed to help boost economic growth in the UK through the promotion of entrepreneurship, and to help SMEs obtain funding which has previously been a struggle through other mediums such as bank loans.

The benefits of investing into an EIS qualifying company include:

  • 30% Income Tax relief.
  • Up to 28% Capital Gains deferral.
  • Ability to ‘carry back’ your investment to the previous tax year.
  • Any gains on the disposal or sale of shares after a period of three years are also free from capital gains tax.
  • Should the business fail within the three year period the investor can also receive up to 45% loss relief, which can be offset against their Income Tax.

There are several criteria that businesses will need to meet in order to qualify as an EIS business, and some trades are also excluded. For example the business must:

  • Be a UK registered company
  • It must have less than 250 full time employees (499 for knowledge intensive companies)

  • Must be an unquoted company
  • Gross assets must not exceed £15 million prior to share issue or £16 million

RISK

EIS & SEIS qualifying businesses are high risk because they are early stage businesses.
Source: https://www.gov.uk/topic/business-tax/investment-schemes


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