The SEIS and EIS schemes rolled out by the UK Government are intended to boost investments in startups by offering large doses of tax relief for investors. Ideally, startups that may not have otherwise attracted investments, due to a certain level of risk, stand to benefit from these investments, while for investors, that tax breaks give them more incentive to plough their money into investments.
|Name of Scheme||EIS (Enterprise Investment Scheme)||SEIS (Seed Enterprise Investment Scheme)|
|Eligibility Criteria (Assets)||The total assets of the company should not exceed £ 15 million.||The total assets of the company should not exceed £ 200,000.|
|Eligibility Criteria (Employees)||The number of employees in the company should not be more than 250 at the time of investments.||The number of employees in the company should not be more than 25 at the time of investments.|
|Eligibility Criteria (Listing)||The company should not be a listed entity at the time of seeking investments.||The company should not be a listed entity at the time of seeking investments.|
|Eligibility Criteria (FOR INVESTOR)||Should not hold more than 30% of shares||Should not hold more than 30% of shares|
|Investment Limits||£ 1,000,000 per investor
£ 5,000,000 total per year
£ 12,000,000 total over company lifetime
|£ 100,000 per investor
£ 150,000 total
|Lock in period||Three years|
|Tax relief||Income Tax, Capital Gains Tax Exemption, Loss Relief, CGT Reinvestment||Income Tax, Capital Gains Tax Exemption, CGT Reinvestment, Loss Relief, Inheritance Tax Relief|
Both EIS and SEIS are great options to help startups raise capital easily. In the case of SEIS, investors can also be directors of the companies, and can enjoy tax relief upto 50% on investments upto the individual limit of £ 100,000 and also enjoy relief from Capital Gains Tax arising out of gains from the SEIS shares. In the case of EIS, investors can receive relief to the tune of 30% for investments upto the individual limit of £ 1,000,000, with similar CGT relief.
Both SEIS and EIS are great options for companies to use for raising capital, while offering investors the attractive option of availing multiple tax benefits with a single investment option. Take advice from an expert accountant to maximise your tax relief legally and present your company as a viable investment option.
More on Gov.uk site here