Seed Investment & Venture Capital
Information updated as at 22-January-2024 | Source https://www.gov.uk/
Unlock Growth and Secure Tax Advantages SEIS and EIS Schemes
You need cash? You have some potential investors? 4 venture capital schemes our UK government that encourages investment:
Seed Enterprise Investment Scheme (SEIS)
Enterprise Investment Scheme (EIS)
Venture Capital Trusts (VCTs)
Social Investment Tax Relief (SITR)
Getting Started:
Seek Professional Advice | Contact us at VKR Global today. VKR team can help you with the following:
Prepare Required Documents: Compile business plans, financial forecasts, and other necessary information.
Submit Compliance Statement: Fulfill HMRC requirements to qualify for SEIS benefits.
Advance Assurance application will provide confidence to your potential investors with a pre-approval by HMRC
Seed Enterprise Investment Scheme (SEIS)
Fuel your startup's journey with SEIS, a government-backed initiative offering investors attractive tax reliefs and your company much-needed capital.
Benefits for Investors:
50% Income Tax Relief: Claim back half of your investment (up to £100,000 per year) against your income tax.
Capital Gains Tax Exemption: Hold SEIS shares for at least three years and enjoy tax-free profits upon sale.
Loss Relief: Offset potential losses against income tax.
50% CGT Reinvestment Relief: Redeploy 50% of gains from other assets into SEIS to further reduce tax liabilities.
Benefits for Your Company:
Raise up to £250,000: Access vital funding for early-stage growth.
Attract High-Net-Worth Investors: Offer a compelling investment opportunity with substantial tax incentives.
Boost Confidence and Valuation: Demonstrate strong investor interest and potential.
Eligibility Criteria:
Not carry out an excluded trade. This includes banking, insurance, accounting, legal, financial services, hotels, property development, and energy
UK-Based: Operate and be incorporated in the UK.
Pre-Market Listing: Not currently traded on a recognized stock exchange.
Independent Operations: No control over or by other companies.
Limited Assets and Employees: Gross assets under £350,000 and less than 25 full-time equivalents.
Responsible Fund Usage: Invest raised funds within 3 years in:
Qualifying trade
Investment Risk: SEIS carries inherent risk, with investors potentially losing their capital. HMRC assesses this risk to ensure genuine investment opportunities.
Enterprise Investment Schemes (EIS)
Fuel high-growth startups (trading <7 years, <250 employees, <£15 million assets) with 30% tax relief for investors on up to £1 million invested per year.
Benefits:
Investors: 30% income tax relief, capital gains tax exemption after 3 years, no inheritance tax after 2 years, potential capital gains tax loss relief.
Companies: Raise up to £5 million annually, £12 million total, attract high-net-worth investors.
Eligibility:
UK-based company
Qualifying trade
Trading <7 years (10 years for KICs)
<£15 million gross assets
<250 full-time employees (500 for KICs)
Not publicly traded
Independent operation
EIS offers a win-win situation for early-stage businesses and investors seeking tax-advantaged growth!
Venture Capital Trusts (VCTs)
Allows retail investors to pool their resources and invest in a diversified portfolio of venture capital funds.
Offers up to 30% income tax relief on investments and tax-free dividends.
Minimum investment is typically £5,000 and investments in the underlying companies are spread across various sectors and stages
Social Investment Tax Relief (SITR)
Supports businesses with a specific social or environmental purpose.
Provides 30% income tax relief for individuals investing in qualifying companies.
No limit on the amount invested per year but the company must have a clear social or environmental mission.