SEIS relief can only be applied for by qualifying individuals in a new business, carrying on a qualifying trade.

Many small early-stage companies will be able to use the SEIS to raise funds. However, it’s important to make sure you meet the qualifying trades condition for SEIS.

A qualifying trade is a trade, conducted on a commercial basis, with a view to the realisation of profit. Whilst most business activities qualify there are a number of important excluded business types.

Excluded Trades

The list below indicates excluded trades. But there are other options worth considering, including separating between excluded and permitted SEIS trades. You need to put rigorous structures in place and ideally get an SEIS pre-assurance application with full disclosure.

The list of trades that are excluded for the purposes of qualifying for SEIS include:

  • Dealing with land, commodities and financial instruments
  • Property development
  • Providing legal or accountancy services
  • Financial activities such as banking, insurance, debt-factoring or any other financial activities
  • Operating or managing hotels or nursing/care homes
  • Farming and market gardening
  • Leasing or letting of assets on hire
  • Operating or managing hotels
  • Coal and steel production
2016 Updates

From 6 April 2016, this list extends to include all energy generation activities.

A trade does not qualify if it consists wholly, or substantially, of ‘excluded activities’. A business wanting to use the SEIS to raise funds can carry on some excluded activities, but these must not form more than 20% of the company’s total activities.

There are a number of further conditions in order for a new business to use the scheme. For example, only small unquoted companies, AIM and PLUS Markets listed companies can use the scheme.

The company must have gross assets of no more than £200,000 and less than 25 full-time employees. So, the maximum a company can raise using the SEIS is £150,000.

Do you have any questions about business tax?

If you would like to find out more, we would be more than happy to arrange a free no obligation meeting with you at your office.