SEIS Seed Enterprise Investment Scheme

Wednesday, March 21, 2012 16:52

2012 Budget SEISAs promised the chancellor has confirmed in his March budget documents that there will be a Seed Enterprise Investment Scheme (SEIS) starting from 6th April 2012, although it didn’t get a mention in his actual speech.

Just to clarify for anyone confused by the similarity of SEIS with an existing scheme, there is already an Enterprise Investment Scheme (EIS) which targets larger businesses rather than start-ups.

This big brother to the SEIS also received good news in the budget, with the qualifying size of a company moving from a maximum gross asset size of £7 million with 50 employees, to £15 million with 250 employees. This means later stage investment prospects will now qualify for EIS (see EIS for more information).

The basic information that I covered on my last blog on the SEIS remains unchanged, so I won’t go over that again. Suffice to say it is worth ensuring that your new business qualifies (not all industries do – eg. Property development and financial services) and publicise to potential Investors that they can get tax relief by investing in your business.

Clearly for Investors it’s a no-brainer that you should utilise this new scheme for your investments.

So how do you make use of it?

Luckily those nice people at HMRC have put together a fairly comprehensive web-page that explains the SEIS and how to apply for it. See http://www.hmrc.gov.uk/seedeis/index.htm

They are careful to say that although the scheme starts on the 6th April, until the budget gets Royal Assent (around July) it isn’t set in stone, but it’s unlikely to alter in my view.

The HMRC web-pages have a section on how to get advance assurance that your business and the shares that you are going to issue to an Investor will qualify. It can be useful to do this in making your opportunity attractive.

 

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11 Responses to “SEIS Seed Enterprise Investment Scheme”

  1. Callum says:

    March 22nd, 2012 at 7:13 pm

    Finally, a hint of good news for startups. If you have already been “approved” for EIS, do you automatically qualify for SEIS?

  2. lee says:

    March 22nd, 2012 at 7:14 pm

    my business has not started due to lack of money.I was going to sell seafood around pubs and keep a good British tradition alive.
    i am registered with the environmental health and trading standards.
    All pubs i have been to want it, could this new scheme help me

  3. Dan says:

    March 22nd, 2012 at 8:07 pm

    Not bad at all! It would have been even better to do something about crowdfunding (as the US of A just did today).

  4. simon says:

    March 22nd, 2012 at 10:09 pm

    As an investor, how do i find out what SEIS investment opps there are out there!?

  5. Dreamagility says:

    March 23rd, 2012 at 6:27 am

    We’re very excited about SEIS, bu one of the things we’ve noticed when speaking to VC’s is they don’t like lots of shareholders. The Editor of the Insider suggested a trust to put smaller investors into hide/ contain the number of shareholders and let the SEIS sit in there. Anyone done anything like this and how was it for you? 

  6. Krassimir Kostadinov says:

    March 23rd, 2012 at 7:02 am

    Lawrence, that seems to be good news for the UK start-ups. There was an opinion poll and a discussion on a similar topic (US-related) in the Wall Street Journal online community (http://online.wsj.com/community/groups/strategic-planning-emerging-companies/topics/do-angel-investors-deserve-tax). 68% of the answers were in favour of a tax credit for investors in start-up businesses. I actually voted against tax credits on that poll, here are my reasons:
    1. Taxes are very complex anyway, any additional tax credit policy will only result in more complexity and will open up the doors for tax loopholes.
    2. Successful venture-backed start-ups are done by people who can easily find a jobs elsewhere. In this sense venture-backed start-ups do not really create jobs.
    3. Typical small businesses do create jobs, but typical small businesses do not qualify for venture money anyway (with and without tax credits).

    Personally I am based in Luxembourg, so the tax policy of UK / US does not matter really for me. I think what most start-ups need is not tax credits for investors, and in fact it is not investor money anyway. What most start-ups need is a way to get access to potential clients / sales channels / business partners. In this sense what your organization is doing could be more benefitial in the long run then the costy government program you are describing…

  7. Do investors in start-ups deserve tax breaks « universalowner.com says:

    March 23rd, 2012 at 11:03 am

    Governments of western countries are going crazy about jobs. Following the wisdom that small businesses create jobs, tax credits & incentives for investors in start-ups pop up around the world.

  8. Jie-Ming Chung says:

    March 23rd, 2012 at 11:55 am

    Hi Lee,

    There are a number requirements both the investor and the company needs to meet. There are a number of trades which are excluded, but I don’t think yours is.

    http://www.hmrc.gov.uk/seedeis/how-to-qualify.htm#5

    Regards,

    Jie-Ming

  9. Dave Edwards says:

    March 23rd, 2012 at 1:30 pm

    The main problem I see with SEIS is that the maximum sums possible are very small. Also, be aware that EIS/SEIS can’t run concurrently (you need to have spent all the SEIS funds before receiving new EIS funds).

    Burgess Salmon have great advice on this – they did a great session recently at SetSquared in Bristol.

  10. Yuri Neshitov says:

    March 23rd, 2012 at 9:32 pm

    This is good news! This separate program is a clear evidence of stable positive trend in the industrial policy, I think. 

    Another way to help startups is tax incentives for buyers of new businesses products and services. This may work as power leverage for startups. Tax incentives for investors and tax incentives for buyers from new companies working together may change small business landscape in a radical manner.  Hope we will see it…

  11. John Thomas says:

    July 10th, 2012 at 5:15 pm

    Do you know if a qualifying investor can invest in an EIS and an SEIS in the same tax year?

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