A significant number of small businesses in the UK do not take full advantage of HMRC-approved...
Companies businesses looking to raise finance through EIS investment are typically more developed than those looking for funding using the SEIS and the investment limits and tax reliefs available reflect this.
Does my business qualify for EIS or SEIS relief?
The main qualifying criteria for EIS or SEIS investee businesses are as follows:
- The maximum amount of funds that a company can raise through investments qualifying for SEIS is £150,000. Under the EIS the maximum is £5M in any 12 months with a maximum of £12m over the companies lifetime. There are higher limits for ‘knowledge-intensive’ companies.
- 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 for the SEIS.
- The company must have less than 250 full-time employees for the EIS or their part-time equivalents.
- For groups of companies, the limit applies across the group. There are higher limits for ‘knowledge-intensive’ companies.
- The company’s gross assets must be less than £200,000 at the time of a relevant SEIS share issue.
- There are also time limits as to when investments can be raised by the company and how and when the money must be spent.
- The company cannot have received any investment under either the EIS or VCT scheme before using the SEIS to raise investment.
It is very important that businesses looking to raise finance using either the EIS or SEIS schemes ensure that they qualify. Otherwise, their investors will be unable to claim the promised tax reliefs. HMRC offer an ‘advance assurance’ service for both schemes that help ensure everything is in order before raising any finance.