If you are looking to raise equity investment in your business, knowing about the Seed Enterprise Investment Scheme (SEIS) and Enterprise Investment Scheme (EIS) Schemes are a must. These are HMRC approved schemes that allow individuals to invest in early stage or established businesses and obtain attractive tax breaks. The schemes have been going since 1994 so very well established. 

Why use EIS/SEIS?

Around £2bn a year is invested into SEIS and EIS companies although that number has started to plateau recently. This is surprising given they are excellent schemes and for businesses looking to raise equity they are a pre-requisite for most investors. It may be down to a lack of knowledge as we do meet many entrepreneurs who are unaware of the schemes that can be so beneficial to their changes of investment. 

Changes to the Scheme

There are some changes for SEIS that are due to come into force in April 2023, making this scheme even more critical for early-stage businesses and their investment strategy. 

The headline details are: 
 
SEIS 
– Businesses up to 2 years (3 years from April) old (from first commercial sale) 
– Company can raise up to £150k (£250k from April) 
– Individual can invest up to £100k (£200k from April) and receive 50% of their investment as an offset to their personal tax bill 
– If shares held for 3 years no capital gains tax 
– If the company failed the investor would receive loss relief that could lead up to 

up 72.5% of total investment being recouped 
 
EIS 
– Established business up to 7 years old* (from first commercial sale) 
– Company can raise up to £5m per annum (£10m for KIC) 
– Individual can invest up to £1m per annum 
– Same benefits as SEIS apart from initial tax relief is 30% not 50% 

– If shares held for 3 years no capital gains tax 

*this can be extended to 10 years if you are a Knowledge Intensive Company (KIC) which means carrying out research, development or innovation that will create intellectual property and includes 20% of employees carrying out the research. 

Snowball can Help

We have advised on nearly 100 of these schemes now and can produce the package that needs to go to HMRC for what is called an Advanced Assurance Certificate, which is HMRC confirming in writing that your proposals and eligibility are okay, and you can then show the certificate to potential investors. 

If you wish to find out more about the scheme or would like to discuss us obtaining you an Advanced Assurance Certificate, please contact us.