Could tax relief be your key to start-up growth?

The Seed Enterprise Investment Scheme (SEIS) is designed to help small, early-stage companies raise equity finance by offering tax relief to individual investors who purchase new shares in those companies.

Benefits for entrepreneurs

Entrepreneurs in the early stages of a new venture will likely be on the lookout for funding, but can often struggle to attract enough, no matter how good their business concept.

SEIS is an attempt to remove some potential barriers that investors face when deciding whether to invest in a fledgling enterprise. Thanks to the tax breaks on offer, investors can mitigate some risks associated with investment in start-ups.

In return for giving up equity in their enterprise, an entrepreneur will get investment that they may otherwise struggle to attract through more traditional avenues such as banks, and will also get their business idea in front of many more people by promoting their funding needs on various crowdfunding sites.

Some fine print

Some factors to consider for entrepreneurs and investors include:

  • The company must have fewer than 25 employees
  • The company must be no more than two years old
  • The company must have assets of less than £200,000
  • SEIS investors can place a maximum of £100,000 in a single tax year
  • A company can raise no more than £150,000 in total via SEIS investment
  • Investors cannot control the company receiving their capital, and must not hold more than a 30% stake in the company in which they invest

How investors claim tax relief

Before investors can claim any tax relief, the company must complete form SEIS1 and send it to the Small Companies Enterprise Centre (SCEC).

Investors can then make a claim on their Self Assessment tax return for the tax year in which the shares were issued.

More information

More information on SEIS can be found on the gov.uk website >

And on the SEIS website, which includes the SEIS directory which enables people to easily find a selection of potential SEIS-compliant investment opportunities.