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By Nimbus

Seed Enterprise Investment Scheme

August 30, 2012 | By |

Seed Enterprise Investment Scheme

With the banks still not lending to small businesses, are there other forms of external investment? The government has introduced the Seed Enterprise Investment Scheme (SEIS), which will sit alongside the existing Enterprise Investment Scheme (EIS), to promote investment in the smaller, early stage companies that would normally be overlooked by the EIS investor.

Does your company qualify?

The company must have fewer than 25 employees and assets of less than £200,000.  It can raise a maximum of £150,000 through the scheme, but no investor can receive more than 30% of the company.  The trade being carried on by the company at the date of issue of the relevant shares, must be less than two years old. The majority of trades are included, however there are exclusions and some other conditions to be aware of. More information is available at

How does the investor benefit?

The investor will receive 50% of the cost of the shares off his personal income tax bill, up to a maximum annual investment of £100,000. For the 2012/13 tax year only, if the investor has chargeable gains, realised on any assets in the year, he can also invest those in a qualifying SEIS in the same year (up to £100,000).  In both cases, if the shares are held for more than 3 years, on disposal there is no capital gains tax to pay. Therefore, it is possible to reduce your income tax bill by £50,000 and completely avoid capital gains tax on £100,000, so the maximum tax saving is £78,000 for a £100,000 investment. For more details and other conditions please visit

What do I do next?

Obviously you need to find investors; therefore you need an attractive proposition and a detailed business plan.  Once you have that in place, one of our professionals can help you obtain advance assurance from HMRC that your company will qualify for SEIS, something investors will insist on this prior to parting with their money. You also need to complete Form SEIS1 after the first 4 months of trading, or if not yet trading once you have spent 70% of monies raised, something we can help you with.

If you would like more information about the Seed Enterprise Investment Scheme, or any other approved tax saving opportunities, please get in touch  Nimbus Accounting staff are all qualified accountants and have a specialist knowledge of SME accounting and taxation. We have offices in Brighton & Hove and offer face to face meetings in Sussex and virtual meetings to the rest of the UK.