Seed Enterprise Investment Scheme (SEIS)

If you are an early stage company, SEIS enables you to offer substantial tax savings to equity investors

SEIS helps you attract risk capital from investors by significantly reducing the potential costs for them

SEIS is a tax-advantaged equity investment scheme, similar to the Enterprise Investment Scheme but for earlier stage companies. It is called the Seed EIS because it focuses on smaller businesses in their start-up phase or in the first two years of carrying on a 'qualifying trade'.

The SEIS is not targeted at companies themselves, but rather at individuals who are looking to invest in new companies. If they invest in qualifying companies, they get an income tax credit of 50% of the amount they invest. Additionally, the investor won’t have to pay any Capital Gains tax when they sell their shares. See the FAQs section for more detail.

How we can help

The SEIS Full Solution Package – a complete service to get your company SEIS approved, including obtaining advance approval from HMRC so that your investors have assurance of eligibility, advice on how to structure your scheme, and filling in the official forms after completion of your funding: £995 + vat - see pricing

Our main specialist is Jerry Davison, who has been awarded an EIS Diploma by the EIS Association.

Get in touch - call us on 01392-432654 or email office@millconsultancy.co.uk

Always remember that we can help growing companies in many ways - as well as obtaining SEIS and/or EIS approval, we can provide essential company secretarial services, such as shareholders' agreements, filing of annual returns and organising your share issues, and also set you up with share option schemes.

How does an SEIS work?

Investment

A group of six investors decide to invest £170,0000 in a young technology company.

SEIS relief

Of the £170,000 invested £20,000 was invested by a non-UK resident, so the remaining £150,000 is eligible for SEIS income tax relief of up to 50%.

SEIS certificates

An application is made to HMRC for the SEIS certificates and these are issued within a week. No one shareholder can own more than 30% of the business.

Return on investment

The investors obtain £75,000 of income tax relief between them. After 3 years they are also exempt from capital gains tax on any profit on the shares.

Helps entrepreneurs

SEIS is a great way to help entrepreneurs raise that very difficult initial funding for their business.

The positives of SEIS for investors

  • Investors can invest in businesses that have been operating for less than two years (at the date of issue)
  • The business can raise a maximum of £150,000 through SEIS (this is an overall company total not an annual limit)
  • There must be fewer than 25 full-time employees and gross assets of the business must be below £200,000 before investment
  • Investors can benefit from income tax relief of 50% on investments up to £100,000 per individual per tax year
  • An investor may not hold more than 30% of the shares in the company
  • Subject to conditions, the disposal of SEIS shares after three years will be exempt from Corporation Gains Tax

The potential SEIS pitfalls:

  • Income tax relief will be withdrawn in certain circumstances including a disposal of the shares within three years
  • A director may make a qualifying investment but not an employee or an associate of an employee
  • If the shares fail to meet the qualifications for SEIS for three years then the exemption will be withdrawn