What can be raised and invested under SEIS and EIS Tax Relief?

How much can a company raise under SEIS & EIS Tax Relief?‍

For SEIS and EIS Tax Relief, a company can raise a maximum of £150,000 in SEIS funding. Under EIS, you can raise up to £5 million each year, and a maximum of £12 million in your company’s lifetime. This also includes amounts received from other venture capital schemes. Your company must receive investment under a venture capital scheme within 7 years of its first commercial sale.

You may not be able to receive the full amount if your company has received any de minimis state aid in the last three years, the cost of which will count towards the limit for investment.

Where a funding round involves both SEIS and EIS funding, it is important that the SEIS shares are issued before the EIS funds. In practice this means a company needs to issue SEIS share certificates first, or date them appropriately, and then issue the EIS shares at least one day after. ‍

You must follow the scheme rules so that your investors can claim and keep EIS tax reliefs relating to their shares. Tax reliefs will be withheld or withdrawn from your investors if you do not follow the rules.

How much can an investor invest under SEIS & EIS Tax Relief?‍

Any one individual can invest a maximum of £100,000 under SEIS per tax year, whilst individuals investing in EIS can invest no more than £1 million per tax year.

Shares issued under the SEIS and EIS schemes must be ordinary shares, with no preferential rights attached.

There are also strict criteria that an individual investing under SEIS or EIS must not hold more than 30% of the company’s overall shares, nor can they be connected to the company in a Director or Employment capacity. So, for example, spouses and civil partners, parents and grandparents, children and grandchildren, of anyone with a controlling interest in the company (30% or more of the shares or voting, or an employee of the company) cannot get SEIS or EIS.

An investor may be given a Director position on the board after the shares are issued but not before, and it is therefore important that an investor is issued their shares before they’re appointed as a Director.

How TBAT can help

We support business in claiming through both the Enterprise Investment Schemes (EIS) and Seed Enterprise Investment Schemes (SEIS). Please contact us for further information.