Ambitious entrepreneurs who want to attract investors can use two different schemes to provide the investor with income tax relief on the value subscribed for shares and capital gains tax relief on the disposal of those shares.
These schemes are: the enterprise investment scheme (EIS) and the seed enterprise investment scheme (SEIS).
The SEIS, designed for young, growing trading companies seeking to raise relatively modest amounts of capital, has until now been subject to fairly restrictive conditions.
From 6 April 2023 the amount that a single company can raise using the SEIS will increase from £150,000 to £250,000. For larger amounts companies should apply for clearance from HMRC to issue shares under the EIS.
For the SEIS to apply the company’s trade must have started within two years of the date the shares are issued but due to the pandemic this timetable has been difficult to meet. The age limit on the qualifying trade will now be raised to three years.
The maximum an investor can subscribe for shares under the SEIS will double from £100,000 to £200,000 per year from 2023-24. Please ask us for advice if you are considering taking advantage of the SEIS.