Benefits SEIS EIS Income Tax Relief: Investors can claim up to 50% income tax relief on the amount invested. Investors can claim up to 30% income tax relief on the amount invested. Dividend Tax Relief: No tax relief benefit No tax relief benefit Capital Gains Tax Relief: No Capital Gains Tax (CGT) on any gains from the SEIS investment as long as fully subscribed shares are held for at least three years. Additionally, 50% CGT relief on gains from an investment in a non-SEIS company if the gains are reinvested into an SEIS-eligible company. No Capital Gains Tax (CGT) on any gains from the EIS investment as long as fully subscribed shares are held for at least three years. Capital Gains Deferral Relief: N/A If you have a capital gain from the sale of any asset, you can defer the CGT by investing the gain into EIS shares. Loss Relief: If a business doesn’t do well and you sell your SEIS shares at a loss, you can claim SEIS loss relief. If a business doesn’t do well and you sell your EIS shares at a loss, you can claim EIS loss relief. In the same tax year or tax year before Carry Back Relief: Tax relief can be carried back to the previous tax year if you haven’t invested the maximum you’re allowed under SEIS in that year. N/A Inheritance Tax Relief: There’s no Inheritance Tax on SEIS shares as long as they are held for at least two years. There’s no Inheritance Tax on EIS shares as long as they are held for at least two years. Please note that the company, investor, and proposed investment must meet the conditions of the chosen scheme.

SEIS EIS Eligibility: carry out a trade that qualifies unquoted company with a permanent establishment in the UK does not control another company unless that company is a qualifying subsidiary has not been controlled by another company less than 25 employees gross assets under £350,000 before any shares are issued has not received investments through the EIS or Venture Capital Trust (VCT) carry out a trade that qualifies unquoted company with a permanent establishment in the UK does not control another company unless that company is a qualifying subsidiary is not controlled by another company or does not have more than 50% of its shares owned by another company less than 250 employees gross assets less than £15 million before any shares are issued., and not more than £16 million afterwards Age of your company: less than two years of trading history less than seven years of trading history (if qualifying subsidiary, then earliest as a group) Post seven years: New product or geographic market and seeking at least 50% funding on the average of last five years annual turnover Meeting risk capital condition aim to grow and develop trade long-term pose a risk of loss to capital for the investor seek to grow and develop trade long-term pose a risk of loss to capital for the investor Use of Funds: N/A If you have a capital gain from the sale of any asset, you can defer the CGT by investing the gain into EIS shares. Loss Relief: the money raised must be spent within three years of the share issue on a qualifying trade or preparing to carry out a qualifying trade or research and development that’s expected to lead to a qualifying trade the money raised must be spent within two years of the share issue on a qualifying trade or preparing to carry out a qualifying trade or research and development that’s expected to lead to a qualifying trade Issuing shares full-risk ordinary shares shares paid in fully, in cash are not redeemable carry no special rights to your assets can have limited preferential rights to dividends dividends cannot be allowed to accumulate or allow the dividend to be varied full-risk ordinary shares shares paid in fully, in cash are not redeemable carry no special rights to your assets can have limited preferential rights to dividends dividends cannot be allowed to accumulate or allow the dividend to be varied The investor (individual) cannot be employed by the company or any subsidiary – except as a director in some cases cannot be associates such as parents, spouses, business partners, etc cannot hold more than 30% of shares, right to assets if the company is wound-up or voting rights their investment limit per tax year is £200 000 cannot be employed by the company or any subsidiary – except as a director in some cases cannot be associates such as parents, spouses, business partners, etc cannot be employed by the company or any subsidiary – except as a director in some cases cannot hold more than 30% of shares, right to assets if the company is wound-up or voting rights their investment limit per tax year is £1 million, and additional £1 million in knowledge-intensive companies Essential Considerations When Opting for These Schemes: The information provided is a high-level overview, and the actual process may involve additional steps and requirements. It’s recommended to obtain ‘advance assurance’ from HMRC so that your company pre-qualifies for the scheme. HMRC Compliance statements are required to allow your investors to claim tax relief. Tax reliefs will be withheld or withdrawn from your investors if you do not adhere to the conditions for at least three years after investing. It’s advisable to start the application process well before the end of the tax year to ensure that all requirements are met promptly.

Tax-Efficient Venture Capital Schemes for SMEs

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Tax-Efficient Venture Capital Schemes for SMEs

Empowering Growth, Maximising Potential: Attracting Investors, Our Priority

In the fast-paced business world, start-ups and Small and Medium Enterprises (SMEs) must seize every opportunity to grow. Our tax-efficient venture capital schemes are designed to help you do just that. By offering tax-efficient shares in your business, we help attract and retain investors, providing a fantastic avenue for businesses to raise funds. The UK government has initiated venture capital schemes to encourage investment in high-risk SMEs: the Seed Enterprise Investment Scheme (SEIS) and the Enterprise Investment Scheme (EIS).

Seed Enterprise Investment Scheme (SEIS):

The SEIS is a powerful tool for startups and early-stage businesses seeking funds. With a maximum lifetime funding limit of £250,000, SEIS is an excellent option for businesses looking to get off the ground.

Enterprise Investment Scheme (EIS):

The EIS offers attractive tax incentives for investing in more established SMEs seeking to raise funds. With a maximum funding limit of £5 million per tax year and £12 million in its lifetime, the EIS is an excellent option for businesses looking to expand. If your company conducts research, development, or innovation, you may qualify as a ‘knowledge-intensive company’ and be eligible for higher funding limits.

Benefits of SMEs offering these schemes:

Attract Investment:

These schemes offer significant tax reliefs to investors, making your business a more attractive investment opportunity.

Mitigation of Financial Risk for Investors:

The tax reliefs provided by SEIS and EIS help reduce the financial risk for investors, making them more willing to invest in high-risk start-ups and SME businesses.

Expand Investment Pool:

You can attract a wider pool of investors by offering SEIS or EIS shares.

Support Business Growth:

The investment raised through these schemes can support your business’s growth, research and development.

The tax relief benefits investors get from your SEIS or EIS scheme:

Benefits	SEIS	EIS
Income Tax Relief:	Investors can claim up to 50% income tax relief on the amount invested.	Investors can claim up to 30% income tax relief on the amount invested.
Dividend Tax Relief:	No tax relief benefit	No tax relief benefit
Capital Gains Tax Relief:	No Capital Gains Tax (CGT) on any gains from the SEIS investment as long as fully subscribed shares are held for at least three years. Additionally, 50% CGT relief on gains from an investment in a non-SEIS company if the gains are reinvested into an SEIS-eligible company.	No Capital Gains Tax (CGT) on any gains from the EIS investment as long as fully subscribed shares are held for at least three years.
Capital Gains Deferral Relief:	N/A	If you have a capital gain from the sale of any asset, you can defer the CGT by investing the gain into EIS shares.
Loss Relief:	If a business doesn’t do well and you sell your SEIS shares at a loss, you can claim SEIS loss relief.	If a business doesn’t do well and you sell your EIS shares at a loss, you can claim EIS loss relief. In the same tax year or tax year before
Carry Back Relief:	Tax relief can be carried back to the previous tax year if you haven’t invested the maximum you’re allowed under SEIS in that year.	N/A
Inheritance Tax Relief:	There’s no Inheritance Tax on SEIS shares as long as they are held for at least two years.	There’s no Inheritance Tax on EIS shares as long as they are held for at least two years.
Please note that the company, investor, and proposed investment must meet the conditions of the chosen scheme.

This is an overview of the main conditions for the scheme:

	SEIS	EIS
Eligibility:	carry out a trade that qualifies unquoted company with a permanent establishment in the UK does not control another company unless that company is a qualifying subsidiary has not been controlled by another company less than 25 employees gross assets under £350,000 before any shares are issued has not received investments through the EIS or Venture Capital Trust (VCT)	carry out a trade that qualifies unquoted company with a permanent establishment in the UK does not control another company unless that company is a qualifying subsidiary is not controlled by another company or does not have more than 50% of its shares owned by another company less than 250 employees gross assets less than £15 million before any shares are issued., and not more than £16 million afterwards
Age of your company:	less than two years of trading history	less than seven years of trading history (if qualifying subsidiary, then earliest as a group) Post seven years: New product or geographic market and seeking at least 50% funding on the average of last five years annual turnover
Meeting risk capital condition	aim to grow and develop trade long-term pose a risk of loss to capital for the investor	seek to grow and develop trade long-term pose a risk of loss to capital for the investor
Use of Funds:	N/A	If you have a capital gain from the sale of any asset, you can defer the CGT by investing the gain into EIS shares.
Loss Relief:	the money raised must be spent within three years of the share issue on a qualifying trade or preparing to carry out a qualifying trade or research and development that’s expected to lead to a qualifying trade	the money raised must be spent within two years of the share issue on a qualifying trade or preparing to carry out a qualifying trade or research and development that’s expected to lead to a qualifying trade
Issuing shares	full-risk ordinary shares shares paid in fully, in cash are not redeemable carry no special rights to your assets can have limited preferential rights to dividends dividends cannot be allowed to accumulate or allow the dividend to be varied	full-risk ordinary shares shares paid in fully, in cash are not redeemable carry no special rights to your assets can have limited preferential rights to dividends dividends cannot be allowed to accumulate or allow the dividend to be varied
The investor (individual)	cannot be employed by the company or any subsidiary – except as a director in some cases cannot be associates such as parents, spouses, business partners, etc cannot hold more than 30% of shares, right to assets if the company is wound-up or voting rights their investment limit per tax year is £200 000	cannot be employed by the company or any subsidiary – except as a director in some cases cannot be associates such as parents, spouses, business partners, etc cannot be employed by the company or any subsidiary – except as a director in some cases cannot hold more than 30% of shares, right to assets if the company is wound-up or voting rights their investment limit per tax year is £1 million, and additional £1 million in knowledge-intensive companies
Essential Considerations When Opting for These Schemes:
The information provided is a high-level overview, and the actual process may involve additional steps and requirements. It’s recommended to obtain ‘advance assurance’ from HMRC so that your company pre-qualifies for the scheme. HMRC Compliance statements are required to allow your investors to claim tax relief. Tax reliefs will be withheld or withdrawn from your investors if you do not adhere to the conditions for at least three years after investing. It’s advisable to start the application process well before the end of the tax year to ensure that all requirements are met promptly.

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Tax-Efficient Venture Capital Schemes for SMEs

Seed Enterprise Investment Scheme (SEIS):

Enterprise Investment Scheme (EIS):

Benefits of SMEs offering these schemes:

Attract Investment:

Mitigation of Financial Risk for Investors:

Expand Investment Pool:

Support Business Growth:

The tax relief benefits investors get from your SEIS or EIS scheme:

Benefits

SEIS

EIS

This is an overview of the main conditions for the scheme:

SEIS

EIS

Essential Considerations When Opting for These Schemes:

How we can help

Related Services

Business Advisory & Consultancy

Employee Share Schemes for SMEs

Growth Investment Strategy

Related Insights

Venture Capital and Employee Share Schemes for SMEs

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