SEIS and EIS

Like SEIS, this scheme helps your company raise funds by offering tax reliefs to individual investors. In addition, it is designed to help you grow your business.

With both schemes, some rules must be followed so that your investors can claim and keep the tax reliefs relating to their shares.

The shares issued must meet the exact requirements under both schemes. They must be paid up in full, in cash, on the issue and must be full-risk ordinary shares which

• Are not redeemable
• Carry no special rights to your assets

Risk-to-capital condition

This applies to both schemes. HM Revenue and Customs (HMRC) need an explanation of how the investment in your company meets the condition, which means:

• Your company must use the funds raised for growth and development
• The investment should carry the risk that the investor will lose more capital than they are likely to gain as a net return

How the schemes work

SEIS

• You can receive a maximum of £150,000
• The investment should carry the risk that the investor will lose more capital than they are likely to gain as a net return
• Counts towards any limits for later investments through other schemes

EIS

• You can raise to £5m each year, and a maximum of £12m in your company’s lifetime, including amounts raised under other schemes
• Your company must receive investment under the project within seven years of its first commercial sale
• Special rules apply to knowledge-intensive companies that extend the time and investment limits

Tax reliefs will be withheld or withdrawn from your investors if you do not follow the directions for at least three years after the investment is made.

Advance assurance

You can ask HMRC if your share issue is likely to qualify before you go ahead. We can help you with this process. The wording of the risk-to-capital condition narrative is significant, and we have a track record of getting this right.

Compliance

When you’ve issued your shares, you must complete a compliance statement. Again, we can help you with this process.

Next steps to check your eligibility

If you want to know more about EIS and SEIS, call us today on 0179 542 0822 or drop us a line using our enquiry form.