Surprisingly the number of deals and the amount invested under EIS (Enterprise Investment Schemes) fell last year by 15%. 

The number of companies raising funding through the scheme fell from 4,480 to 4,205 last year, raising just under £2bn between them, down from a record £2.3bn the previous year. 

Despite the fall, 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.  

Around £2bn a year is invested into SEIS and EIS companies. They are excellent schemes and for businesses looking to raise equity they are a pretty much 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.  

Some changes came into force last year for SEIS, making this scheme even more critical for early-stage businesses and their investment strategy.  
 
The headline details are:  

SEIS Scheme 
– Businesses up to 3 years old (from first commercial sale)  
– Company can raise up to £250k  
– Individual can invest up to £200k and receive up to 50% of their investment as an offset to their personal tax bill  
– If shares held for 3 years then no capital gains tax  
– If the company fails the investor would also receive loss relief that could lead up to 72.5% of total investment being recouped  
 
EIS Scheme 
– 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 then 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.  

  
We have advised on more than 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.