Which scheme suits your business?

For businesses looking for investment to help them achieve their medium to long-term growth plans, usually shares are provided in the company for exchange of cash and must be paid up in full when they are issued and likewise, in order to receive investment under SEIS or EIS, the funds received must be spent for a qualifying business activity.

Ricky is a higher rate taxpayer. In April 2016-17, Ricky has a capital gain of £80,000 from selling a property. He invested the whole gain into a new SEIS qualifying company. In 2020/21 he disposes of his SEIS shares for £200,000, generating a profit of £120,000.

In April 2016-17, Ricky had a capital gain of £80,000 from selling a property He invested £100,000 in 2016-17 into an EIS approved company. In 2020/21 he disposes of his EIS shares for £200,000.

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Seed Enterprise Investment Scheme (SEIS) & Enterprise Investment Scheme (EIS)

The Seed Enterprise Investment Scheme (SEIS) and Enterprise Investment Scheme (EIS) offer great tax-efficient benefits to investors in return for investment in small, medium and early-stage start-up businesses in the UK.

The Seed Enterprise Investment Scheme is incredibly generous. Investors can receive initial tax relief of 50% on investments up to £200,000 a year and Capital Gains Tax (CGT) exemption for any gains on SEIS shares. The Enterprise Investment Scheme (EIS) allows eligible investors to claim up to 30% income tax relief on investments up to £1 million per tax year.

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SEIS and EIS tax benefits for investors

There are huge benefits to SEIS & EIS for investors and the benefits of using the specialist dns team to advise you. Here are just a few of them…

Income tax relief

50% for SEIS and 30% for EIS upfront income tax relief claimable for investments.

Capital Gains Tax Reinvestment Relief

50% exemption from Capital Gains Tax for your investors if proceeds from the sale of their other assets are re-invested in SEIS shares.

Loss relief reduced exposure

SEIS and EIS investors can take advantage of the loss relief, should the company they are investing in fail or they make a loss on selling the shares. The loss relief provision reduces the exposure to these investments to a certain extent.

CGT deferral relief

We’ll advise if capital gains made on the disposal of an asset can be deferred by reinvestment in the Enterprise Investment Scheme (EIS)

Inheritance tax relief

One of the lesser-known benefits of the schemes is that the shares become exempt from Inheritance Tax after you have held them for two years at least. We can advise on this.

Eligibility and advanced assurance

We can advise companies on the eligibility conditions for SEIS and EIS. Our experts work with you to get advance assurance on the schemes from HMRC.

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Our EIS and SEIS services for Investors and Companies

Our leading SEIS and EIS experts can advise you on investing and also, if you are a start-up or early-stage business, can advise if you qualify for this funding. Our services include:

Investors:

Check if you qualify for EIS/SEIS relief
Allotment of shares & submission to Companies House
Submission of compliance statement to HMRC
Securing tax relief certificates
Completing certificate for investors

Companies:

Review of the company’s eligibility for EIS/SEIS
Advance assurance application to HMRC
Review of shareholder's agreement & business plan

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Do you need advice on SEIS / EIS from leading experts who can advise on all aspects of these schemes? Give us a call today at 03300 886 686 to speak to our advisors, and we'll find the right solution to all R&D needs.

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Frequently asked questions for Seed Enterprise Investment Scheme (SEIS) & Enterprise Investment Scheme (EIS)

Got questions?

What are the tax benefits to investors?

SEIS offers tax generous reliefs to investors including:

50% income tax relief on the amount of investment up to £200,000 per tax year.
Capital gains tax (CGT) exemption on disposals of SEIS shares if the investor holds these shares at least for more than three years.
Reinvestment relief of 50% or £100,000 from capital gains if you sell any asset and use all or part of the gain to invest in shares that qualify for SEIS.
Loss relief if the value of the investment declines instead of going upwards.
Inheritance tax relief on the value of the shares if the investor holds these shares at least for two years.
If shares are sold at a loss, the investor may be able to offset the loss against their other capital gains.

EIS tax benefits for investors include:

30% income tax relief on the amount of investment of up to £1m per tax year. From 2023/24 up to £2 million, if at least £1 million of that is invested in knowledge-intensive companies.
CGT exemption on the disposal of EIS shares if held for the qualifying period and on which Income Tax relief was given and not withdrawn.
If EIS shares are disposed of at a loss on which Income Tax relief has been taken, the loss can be offset against income for that year and the previous year and it would be beneficial instead of being offset against capital gains.
Inheritance tax relief on the value of the shares if the investor holds these shares at least for two years.
Capital Gains Tax can be deferred if you use your gains from the sale of any asset to make any amount of investment in a company that qualifies for EIS.

How does the SEIS work?

The scheme:

Offers tax reliefs to those who buy new shares in the company.
Helps to raise money when your company starts to trade.
Offer to raise a maximum of £250,000 through Seed Enterprise Investment Scheme.

How does the EIS work?

The scheme:

Offers tax reliefs to those who buy new shares in the company.
Helps companies to raise money up to £5 million each year and a maximum of £12 million in your company’s lifetime to grow business.

Which scheme is best for my business?

It depends on the company’s requirements and funding needs. Still, there are a few situations where you can clarify whether your company meets SEIS and EIS criteria.
The below situations where you can examine which scheme is best for your business.

If you need up to £250,000 and your business meets SEIS criteria, then SEIS would be best.
If you need more than £250,000 and your business meets both SEIS and EIS criteria, then both would be best.
If your business is not suitable according to the SEIS criteria but eligible for EIS, then EIS would be best.