5th August 2013

SEIS and EIS - tax incentives for investors

these schemes provide benefits to the investor by providing tax relief for investment in smaller companies

SEIS and EIS – What does it all mean?

Projects listed with CrowdBnk can take part in SEIS (Seed Enterprise Investment Scheme) or EIS (Enterprise Investment Scheme) when raising funds in return for  equity.  Both of these schemes provide benefits to the investor by providing tax relief for investment in smaller companies.

SEIS provides a 50% income tax relief at the cost of the shares purchased for investors supporting nascent start-up. Additionally it eliminates capital gains tax on an investor’s eventual sale of his/her shares, provided the company remains as qualifying SEIS company for three years.  Learn more about SEIS here.

It is capped at individual investments of £100,000 per tax year, and each qualifying company can only raise up to £150,000.  As it is designed to support emerging start-ups, it also requires firms have fewer than 25 employees, have been trading less than two years time, and not have raised any money from EIS or VCT investors.

EIS is the next step up in terms of limits on company size; it provides a 30% income tax relief to investors supporting smaller, unlisted PLCs. It also provides capital gains tax relief on share sell-off after three years. It applies to individual investments of up to £1 million per year and a per-company limit of £5 million.  Learn more about EIS here.

Here at CrowdBnk we encourage all of our projects offering equity to their supporters to consider utilising one of these schemes.

To help our investors spot an investment opportunity with tax relief benefits we have added tags to each of the projects.   We use these tags to track the  progress of projects as they apply to Small Companies Enterprise Centre (SCEC) for these schemes.

Here is a list of what each tag means:

SEIS tags

SEIS suitable - This investment opportunity meets the criteria for SEIS

SEIS Advanced Assurance Applied - This investment opportunity has submitted details of their plans to raise money, their structure and their activities in advance of an issue of shares, so that the SCEC can advise on whether or not the proposed share issue is likely to qualify for relief.

SEIS Advanced Assurance Obtained - This investment opportunity has received an Advance Assurance Form, which is an assurance from the SCEC that it is likely to qualify for SEIS tax relief and can show this letter to potential investors

EIS tags

EIS suitable - This investment opportunity meets the criteria for EIS

EIS Advanced Assurance Applied - This investment opportunity has submitted details of their plans to raise money, their structure and their activities in advance of an issue of shares, so that the SCEC can advise on whether or not the proposed share issue is likely to qualify for relief.

EIS Advanced Assurance Obtained - This investment opportunity has received an Advance Assurance Form, which is an assurance from the SCEC that it is likely to qualify for EIS tax relief and can show this letter to potential investors