Ensuring Scheme Compliance in Businesses and Tax Breaks for Investors
SEIS and EIS schemes are generous to both businesses and investors—respectively, startups can raise up to £250,000 and medium-sized up to £12 million within a set timeframe from issuance throughout their company’s lifetime. Investors, on the other hand, get tax breaks—SEIS investments lead to 50% income tax relief whilst EIS 30%. Investors in any of the schemes pay zero capital gains tax, and if they suffer a loss in their investment, they are given loss relief. Legend Financial helps businesses comply with HMRC’s scheme specifications and investors to maximise their tax breaks. Consult with us today!
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Whilst HMRC guidelines prohibit raising SEIS and EIS on the same day, many companies opt to pursue both funding options simultaneously by issuing SEIS shares first, followed by EIS shares at least a day later to ensure compliance.
To benefit from SEIS tax relief, they should not be employees or hold a substantial stake (over 30%) in the company, and there is an annual investment cap of £200,000 per investor for SEIS-eligible companies.
Most types of businesses are eligible for SEIS and EIS funding, with exceptions including those heavily involved in excluded activities like land or commodity trading, banking, insurance, or moneylending.
Yes, SEIS is considered a de minimis State aid among various venture capital trust schemes. However, it is important to note that EIS and VCTs are approved State aids, and SITR combines both notified State aid and de minimis State aid elements, depending on the investment circumstances.
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