What is the Eligibility Criteria for EIS and SEIS?

EIS and SEIS Tax Relief Eligibility

Most trades qualify for EIS and SEIS funding, but a number are excluded from the schemes entirely. Excluded trades broadly include those dealing in land or commodities, those involved with banking, insurance or money-lending, those providing legal or accountancy services, those involved in property development and those generating and exporting electricity:

• dealing in land, in commodities or futures or in shares, securities or other financial instruments
• dealing in goods otherwise than in the course of an ordinary trade of wholesale or retail distribution
• banking, insurance, money-lending, debt-factoring, hire-purchase financing or other financial activities
• leasing (including letting ships on charter or other assets on hire)
• receiving royalties or licence fees
• providing legal or accountancy services
• property development
• farming or market gardening
• holding, managing or occupying woodlands, any other forestry activities or timber production
• shipbuilding
• producing coal
• producing steel
• operating or managing hotels or comparable establishments or managing property used as an hotel or comparable establishment
• operating or managing nursing homes or residential care homes or managing property used as a nursing home or residential care home
• all energy generating activities

There will inevitably be some grey areas that may need further analysis and discussion.

A key point to note is that companies are only excluded from raising money under SEIS and EIS, if a ‘substantial’ element (+20%) of their trade activity consists of the excluded activity.

As well as ensuring the trade in question is qualifying there are also a number of tests which must be satisfied before you can confidently offer your investors SEIS or EIS:

Your company can use the EIS and SEIS Scheme if:

• is established in the UK
• is not trading on a recognised stock exchange at the time of the share issue
• has no arrangements to become a quoted company or a subsidiary of one at the time of the share issue
• does not control another company unless that company is a qualifying subsidiary
• has not been controlled by another company since the date of your company being incorporated
• does not expect to close after completing a project or series of projects (for EIS scheme)

For SEIS your company and any of its subsidiaries must:

• not have gross assets over £200,000 when the shares are issued
• not be a member of a partnership
• have less than 25 full-time equivalent employees in total when the shares are issued

For EIS your company and any of its subsidiaries must:

• not have gross assets worth more than £15 million before any shares are issued, and not more than £16 million immediately afterwards
• have less than 250 full-time equivalent employees at the time the shares are issued

If you’ve received investment through the Enterprise Investment Scheme (EIS) or from a venture capital trust, you cannot use SEIS.

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.