Enterprise Investment Share Schemes – EIS and SEIS
If you have plans to grow your business, it’s likely that at some point you will look for external investment. The two variations of Enterprise Investment Scheme can help encourage those investors to support you!
Enterprise Investment Scheme (EIS)
The Enterprise Investment Scheme (EIS) is available to businesses at any stage of their life cycle, and enables significant tax relief on the investment.
The available reliefs for qualifying businesses are as follows:
- Income tax relief of up to 30% of the sum invested
- Exemption from Capital Gains Tax
- Capital Gains Tax Deferral Relief
- Exemption from Inheritance Tax
- Loss Relief
As with an SEIS scheme, explained below, there are several stages to establish a scheme, including the preapproval process and applications:
- Confirm the suitability of the business for the scheme.
- Identify or confirm the available tax savings for potential investors, often positively influencing their decision to invest.
- Completion of the necessary applications to HMRC and following them through to approval.
- Issuing the final certificates to investors to enable their claim to the tax relief.
In the past we have been highly successful with EIS schemes, in several instances where other firms have advised that the relief would not be available. One scheme in particular raised £850,000.
In these situations, we would ordinarily prepare Business plans, Finance Plans, the EIS application and deal with its submission, following the process through from start to successful conclusion.
Seed Enterprise Investment Scheme (SEIS)
The Seed Enterprise Investment Scheme (SEIS) helps new businesses, who have not previously traded, to attract investors, to encourage growth.
It allows a maximum investment of £150,000 and if it is structured and implemented correctly, can enable the investor to recover MORE than the original investment in tax rebates.
The key here is that the business cannot have traded, so it is essential that the SEIS scheme be carefully considered before trading starts, otherwise any potential savings are lost.
Once agreed and in place, 100% of the investment must be used within twelve months.
As with an EIS scheme, we can handle all of the processes around the SEIS scheme, including the preapproval process and applications:
- Confirm the suitability of the business for the scheme.
- Identify or confirm the available tax savings for potential investors, often positively influencing their decision to invest.
- Completion of the necessary applications and following them through to approval.
- Issuing the final certificates to investors to enable their claim to the tax relief.
If you’d like to know more about Enterprise Investment Schemes or to discuss other ways to encourage investors, or obtain business finance, please do get in touch.