Entrepreneurs launching startups or running early stage businesses are very often unaware of the Seed Enterprise Investment Scheme (SEIS) and ways it can help grow their company. Seed EIS is a government-run initiative which pairs investors with compatible business organisations.
About Seed EIS
Seed EIS was launched in 2012 and offers investors and Venture Capital Trusts an extremely tax-efficient way to invest in new businesses. In essence, financiers have the ability to invest up to £100,000 annually in a share of the new business via Seed EIS schemes and will receive 78% or more back by way of tax relief. Startups and existing new businesses looking for finance can benefit considerably from investment of this nature and investors cannot hold more than 30% of any business they back.
It’s possible for new business ventures based in the UK to receive up to £150,000 via SEIS investment, but investors have no control of the company at all.
Applying for funding via Seed EIS
If you plan to apply for funding via Seed EIS, you should not have more than 25 employees and your business should not have traded for more than two years. Businesses with assets of more than £200,000 are exempt from applying for Seed EIS. Applications can only be accepted from businesses within sectors approved for Seed EIS, which does not include finance or investment companies.
Benefits to investors
One of the main benefits of Seed EIS for investors is that up to 50% of tax relief on the investment can be claimed back in the same year the investment is made. Investors can also benefit from capital gains tax exemption on any profits earned from shares in your company and loss relief, if applicable.
The principal aim of Seed EIS is to stimulate entrepreneurship in the UK and boost the economy.
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