The Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) can help emerging and start-up businesses to grow substantially.
Individual investors who purchase new shares in a qualifying company will be able to tap into significant tax reliefs, while the company will benefit from attracting the capital it needs in order to grow.
EIS can enable a company to:
- Raise up to £5 million each year.
- Raise up to a maximum of £12 million in the company’s lifetime.
Similarly, SEIS – which is more geared towards smaller, emerging businesses – can help a company to raise up to £150,000.
Determining eligibility and applying
There are a number of rules in place which need to be taken into account when processing applications in order for investors to benefit from the appropriate tax reliefs.
These rules might differ from company to company, particularly if the business is ‘knowledge-intensive’ and carries out a lot of research and development (R&D) activities.
For EIS, the company needs to:
- Have gross assets of no more than £15 million before the shares are issued.
- Have 250 employees or less.
And for SEIS, it must:
- Have been trading for less than two years.
- Have gross assets of £200,000 or less.
If you have a company and are interested in submitting an application, it is important to follow the right rules so that your investors can claim the appropriate tax reliefs and you can benefit from their funds. This is very important – as reliefs can be withdrawn if you do not follow the rules for several years after the initial investment is made.
To discuss how we can help you with processing EIS and SEIS applications, please contact our tax partner Darren Specterman on 020 8458 7427 or email email@example.com.