While EIS and SEIS schemes both encourage private investment in early-stage companies, there are differences between them.
Whereas EIS dates back to 1994, SEIS was set up more recently, in 2012.
Most types of business will qualify for EIS or SEIS.
To qualify, you must have a permanent establishment in the UK.
You must plan to spend your venture capital investment on qualifying trade.
Your company must be unlisted on the stock exchange, and must not be controlled by, or control, another company.
You may NOT qualify for EIS or SEIS if more than 20% of your trade includes:
For full details of qualifying types of trade, please check government guidance.
You’re only excluded if a substantial part of your trading activity covers any of these areas.
To qualify for EIS tax relief, your company must have:
To qualify for SEIS tax relief, your company must have
In EIS funding, you can raise up to £12 million. For SEIS funding, this figure is a maximum of £150,000.
You may not qualify for the full amount in either case if your company has received any de minimis state aid in the last three years. If this is the case, the cost will go towards your EIS or SEIS limit.
For the investment money you receive under EIS or SEIS to qualify for tax relief under either scheme, you must spend it on:
The money you raise from the investment must be spent within 3 years of the share issue.
You cannot use the investment to buy shares, unless the shares are in a qualifying 90% subsidiary that uses the money for a qualifying business activity.
If your company wants to raise finance using both SEIS and EIS, you must raise investment with SEIS first, before moving onto EIS.
You can, however, apply for both at the same time. If, once you pass the £150,000 limit under SEIS, then you can go on to raise additional funds of up to £5 million under EIS.
There are rules about how you do this. You must always raise funds in the right order, and you cannot issue shares under both schemes on the same day.
Under EIS, any individual can invest up to £1 million in a single tax year. For SEIS the maximum individual investment is £100,000.
Shares you issue under either scheme must be ordinary shares with no preferential rights attached.
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