The Finance Act 2015 – what’s new?

Update: The 2017 Budget made some changes for knowledge intensive companies.

The Finance Act 2015 changed a few things when it received Royal Assent on 18th November 2015.

New restriction: 7 year rule

Your trade must be less than 7 years old for the business to be eligible for EIS. Note that it’s the age of the trade not the company that’s key.

There are 2 exceptions:

  1. It has previously used EIS.
  2. It meets the “50% turnover condition”. Total funds raised from all investors under the schemes over a 30 day period must be at least 50% of the company’s average annual turnover, taken over the last 5 years.

This change is applicable from 18th November 2015.

New restriction: maximum of £12m in risk finance

The maximum a business can raise under EIS and/or SEIS in it’s lifetime is £12m. If the business is part of a group, then the total is calculated across the group.

This change is applicable from 18th November 2015.

New relaxation: the 70% rule has been removed

You no longer need to spend 70% of SEIS funds before issuing EIS shares. But note that the SEIS and EIS shares cannot be issued on the same day.

This change is applicable from 6th April 2015.

These aren’t all the changes but are the ones we have most frequently advised on so far.