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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 £100,000 in 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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There are huge benefits to SEIS & EIS for investors and benefits of using the specialist
dns team to advise you, here’s just a few of them…

Diverse portfolio of investments
We can advise of a wide range of investments to ensure companies we invest in have every chance of growth and success.
Income tax relief
50% for SEIS and 30% for EIS upfront income tax relief claimable for investments.
Capital Gains Tax (CGT) reliefs
50% exemption from Capital Gains Tax for SEIS and tax deferral may be available for EIS.
Loss relief reduced exposure
EIS investors can take advantage of loss relief, the impact of any losses made on individual companies but we’ll reduce your exposure to losses as much as possible.
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 Seed Enterprise Investment Scheme (SEIS) is the availability of inheritance tax relief. We can advise on this.
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Our leading SEIS and EIS experts can advise you on investing and also if you’re a start-up or early stage business can advise on if you’d qualify for this funding. Our services include:

Investors:

  • Check if you qualify for EIS/SEISS 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 company’s eligibility for EIS/SEISS
  • Advance assurance application to HMRC
  • Review of shareholders agreement & business plan
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Do you need an advice on SEIS / EIS from leading experts who can advise on all aspects of these schemes? Give us a call today on 03300 886 686 to speak to our advisors, we'll find the right solution to all R&D needs.

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FAQs

Got questions?

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.

SEIS is focused on very early-stage companies which are looking to raise up to £150,000 of investment. It’s worth noting that your company should be carrying out a qualifying trade and it must not have been carried out for more than 2 years by either your company or any other person who transferred it to your company.

EIS is aimed at businesses in the growth stage, and a company can raise investment of up to £5 million each year, and a maximum of £12 million in a company’s lifetime. If you have already received investment from the other venture capital schemes, it will count towards your £5m or £12m as per the prescribed limit and your shares for EIS investments must be ordinary shares which are not redeemable and carry no special/preferential rights to your assets or dividends.

Each investment scheme has their additional qualifying criteria such as your business segments, how many full-time employees you employ and the value of your gross assets. You will need to meet these criteria before you apply for advanced assurance from HMRC to issue shares under either of the schemes.

Point to consider- when you are planning to raise funds under SEIS and EIS both, it is vital that SEIS shares are issued before EIS shares. Practically, it means a company needs to issue SEIS share certificates first, or date them appropriately before issuing EIS share certificate and it could be as early as one day.

SEIS offers tax generous reliefs to investors including:

  • 50% income tax relief on the amount of investment of up to £100,000 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 £50,000 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 goes decline instead 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 2018/19 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 at a loss on which Income Tax relief has been taken, 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.

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.

Taxation benefits in 2016-17:

Income tax relief - £40,000 (£80,000 x 50%)

CGT reinvestment relief - £11,200 (50% x £80,000 x 28%)

Tax Benefits in 2020-21

Provided that all the qualifying conditions have been met, his CGT of £24,000 (£120,000 x 20%) will be fully exempt.

In the above example, the whole of £40,000 gain (circa £11,200 CGT) becomes exempt from CGT because of the reinvestment relief.

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.

Taxation benefits in 2016/17:

Income tax relief – £24,000 (£80,000*30%)

CGT deferral relief - £22,400 (28% x £80,000*100%)

Taxation benefits in 2020/21:

Provided that all the qualifying conditions have been met, his CGT of £24,000 (£120,000 x 20%) will be exempt whereas the taxes on gains made on property in 2016/17, which he deferred crystallises, but taxed at 20% instead of the 28% and he has to pay £16,000 in CGT.

In the above example, the whole gain of £80,000 is deferred initially but becomes payable when the shares are sold and taxed at a reduced rate of 20% compared to 28% tax on residential properties.

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