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Starting a new company? Consider the SEIS scheme for new, early-stage companies looking to raise funds.
You have to meet a number of conditions in order for a company to be able to benefit from using the SEIS.
The SEIS scheme is really only suitable for small unquoted companies and the rules of the scheme make that clear.
At Key Business Consultants we know just how important it is to get SEIS companies set up the right way at the start. Make one small error and you can exempt yourself or the entire business from significant tax reliefs.
Starting A New Company and the SEIS
- The company’s gross assets (or of the group assets where the company is a parent company) must be less than £200,000. HMRC’s general approach is that gross assets mean all the assets which would be shown on the balance sheet, without any deduction in respect of liabilities.
- The company must be trading for less than two years.
- It must carry on a genuine new trading venture.
- The company must be carrying on a qualifying business activity. Whilst the definition of a qualifying business activity is wide, activities such as property development, operating or managing hotels and nursing homes and farming will not qualify beyond the minimal levels.
- The maximum amount of funds that a company can raise through investments qualifying for SEIS is £150,000.
- There is a maximum limit on the number of employees that the investee company can have when shares are issued. The company must have less than 25 full-time employees or their part-time equivalents. For groups of companies, the limit applies across the group.
- Neither the issuing company nor any qualifying 90% subsidiary may be a member of a partnership.
- The company cannot have received any investment under either the EIS or VCT scheme before using the SEIS to raise investment. However, further investment can be raised using the EIS or VCT scheme after the SEIS.
Once the company has satisfied all the necessary requirements, you have to make an application to HMRC for formal approval.
If you'd like to discuss this further, please get in touch.