What’s a qualifying trade for EIS and SEIS?

The company’s activities must qualify for the company to be eligible for EIS and SEIS.

The general rule is that where the company is doing something to make money, its activities will qualify, although there is a list of activities that are excluded.

The list is long, but you should check it, especially if your trade touches on any of the following: land, property, professional services, royalties, financial activities, ships, metal, investment, farming or energy. The full list is below.

If your trade is on the excluded list, it’s not the end of the road. If the excluded activity forms less than 20% of the whole trade your company can still qualify.

Excluded activities for the Enterprise Investment Scheme & Seed Enterprise Investment Scheme

  • dealing in land, in commodities or futures in shares, securities or other financial instruments
  •  dealing in goods, other than in an ordinary trade of retail or wholesale distribution
  •  financial activities such as banking, insurance, money-lending, debt-factoring, hire-purchase financing or any other financial activities
  •  leasing or letting assets on hire, except in the case of certain ship-chartering activities
  •  receiving royalties or licence fees (though if these arise from the exploitation of an intangible asset which the company itself has created, that is not an excluded activity)
  •  providing legal or accountancy services
  •  property development
  •  farming or market gardening
  •  holding, managing or occupying woodlands, any other forestry activities or timber production
  •  shipbuilding
  •  coal production
  •  steel production
  •  operating or managing hotels or comparable establishments or managing property used as an hotel or comparable establishment
  •  operating or managing nursing homes or residential care homes, or managing property used as a nursing home or residential care home
  •  generating or exporting electricity which will attract a Feed-in Tariff, unless generated by hydro power or anaerobic digestion, or unless carried on by a community interest company, a co-operative society, a community benefit society or a Northern Irish industrial and provident society
  •  providing services to another person where that person’s trade consists, to a substantial extent, of excluded activities, and the person controlling that trade also controls the company providing the services

Great news if your company’s trading activities qualify! Check out the income relief that your lucky investors will benefit from under EIS and SEIS.