What is SEIS?
The Seed Enterprise Investment Scheme. SEIS offers incentives in the form of tax breaks to investors in return for investment in a qualifying UK startup. The scheme offers young entrepreneurs a route to vital funding in the initial stages of their project by effectively minimising the risk to investors.
When was SEIS introduced?
SEIS was revealed as a concept in parliament in 2011, as the startup sector was identified as critical to Britain’s attempt at economic recovery in the wake of the global recession. It was then implemented officially in April 2012 and was confirmed as a permanent piece of legislation a year later.
What’s the difference between SEIS and EIS?
SEIS is targeted at sourcing investment in early-stage companies, whereas EIS helps more established businesses gain funding. The criteria for qualification are different, with EIS allowing investment for companies with up to 250 employees and up to £15 million in assets.
As an Entrepreneur
How should my company register for the SEIS?
You can apply for Advanced Assurance so that HMRC can clarify that you are likely to meet the qualifying conditions for investors to claim the tax benefits. Then follow the steps outlined in the guide.
Should my company be incorporated and registered for corporation tax in order to apply for Advance Assurance?
Yes, you will need to be incorporated in order to get Advanced Assurance however you won’t need to be registered for corporation tax in order to gain the assurance.
How much does Advance Assurance cost?
It is free of charge to get Advance Assurance
My company needs more than the £150,000 allowed through SEIS, what can I do?
You can use the Enterprise Investment Scheme for anything over the allowed amount, use SEIS to raise the first £150,000 and use EIS to raise the rest. If you do take this option, you must spend 70% of your SEIS raised funds before you can issue shares under EIS. Consult a professional before looking at this option.
As an Investor
If I invest in a company under SEIS, how can I guarantee success?
As with any investment, there are risks involved, however these risks are significantly reduced because of the tax benefits offered.
Can the SEIS relief be granted on investment in a company which operates overseas?
While a company can be based overseas, it must have a permanent UK establishment in order to qualify.
Is there a minimum amount required for investment?
There is no minimum requirement. Formerly under the EIS there was a £500 minimum imposed but this has never been the case with SEIS.
Do I still get relief if I invest in my family member’s business?
There are stipulations here. An investor does not qualify for the SEIS if he has more than a 30% stake in the company. For the purposes of SEIS this extends to certain family members too. So if your spouse, parents, children, grandchildren or grandparents have more than a 30% stake, that excludes you from SEIS, however if your sibling, cousin, aunt or uncle have a larger stake, that is fine.