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Startups and early-stage business ventures often face financial and cash flow problems in their first months of operation and these can hinder growth and expansion considerably.

SEIS (The Seed Enterprise Investment Scheme) is a great way to access the additional funding needed by your startup or early-stage business. It’s a great solution for investors as it provides lots of valuable tax efficiencies. The scheme was initiated in 2011 to boost UK economic growth by promoting UK entrepreneurs and the launch and growth of new enterprises.

About Seed EIS

The SEIS was one part of a range of initiatives issued by Chancellor George Osborne in order to ramp up investments into UK organisations.

Investors have the ability to fund businesses up to a maximum of £100,000 in any tax year, and this can be invested into one company or into several organisations.

What SEIS means for business applicants

From the perspective of startups or existing ventures seeking additional funding, there’s a cap of £150,000 on the total that can be raised via SEIS.

One good feature of this type of funding is that investors don’t have the ability to control the activities of the businesses in which they invest and are not allowed to hold more than a 30% stake in the business.

Claiming SEIS investments

Any business wanting to apply for SEIS investments needs to meet the following criteria:

– Must have a permanent UK location and a HQ based in the UK
– Companies should not have more than 25 employees in total
– Businesses should not be more than two years old and should have assets of less than £200,000
– The business should trade within an approved sector, which excludes investment or finance

Benefit to investors

A major benefit SEIS offers to investors is that they can claim back up to 50% in tax relief in the years they make investments, irrespective of their current rate of tax.

Cornel Accountants have the essential expertise to help SMEs or startups in any sector grow their business by taking advantage of all available grants, funding and loans. We also provide a range of cloud-based accountancy services to suit the needs of any business.

Photo: Piggy bank by wuestenigel licensed under Creative commons 4

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