If you are a startup or an early stage growth business looking for early stage equity funding then one of the things to get sorted is your EIS or SEIS application. There are several enterprise incentive schemes in the UK. SEIS (or Seed Enterprise Investment Scheme), and EIS (or Enterprise Investment Scheme) are widely available to private trading companies in the UK. Whilst qualifying and applying for these schemes is down to the company involved the benefit of these schemes is two-fold: partly to the company and partly to the investor.
For the investor in qualifying companies, they get a tax break worth 50% (for SEIS) or 30% (EIS) of their equity investment in the qualifying company. There is also potentially capital gains tax relief on disposing of the investments. For the company, they are more attractive to investors and therefore potentially find it easier to find investment.
So it’s a great tax break – but not everybody can get it. As with all things relating to tax breaks, HM Revenue and Customs has a range of criteria and hoops for the company to jump through in order to qualify. The good news is that you can apply in advance to the taxman for confirmation – and they will give you advance confirmation that your company qualifies for the scheme. This advance confirmation is really worthwhile as otherwise your investors would face uncertainty – and be less inclined to invest!
Want more information or help sorting out EIS or SEIS for your company and your potential investors? Then get in touch.