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Maximum investment under EIS and SEIS

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

Maximum investment into the company

A company can raise £5m in a 12 month period under EIS.

A company can raise £150k in its lifetime under SEIS.

Under EIS and SEIS collectively, a company can raise £5m in total in a 12 month period.

Maximum investment by an individual

An individual investor can invest £1m per year under EIS.

An individual investor can invest £100k per year under SEIS.

These differing caps are due to the tax reliefs under SEIS being more generous than under EIS.

Read more about income tax relief for investors under EIS or SEIS.

Income tax relief under the Seed Enterprise Investment Scheme (SEIS)

Rate of relief

For investments made after 6 April 2012, the rate of income tax relief is 50% of the cost of the shares. For example, the income tax relief on an investment of £10,000 would be £5,000.

SEIS is only applicable for investments made after 6 April 2012.

To be eligible for the relief, the investor must be a UK resident and pay income tax in the UK. Remember, it’s a tax relief; so the investor must be paying income tax to claim it.

Investment limit

The annual tax relief limit is £50,000 which means an investment of up to £100,000 per year is possible.

When & how investors receive their relief

Depending on both the timing of the investment and the claim for relief, income tax relief will be received either through:

  • a rebate from HMRC (“Scenario 1“); or
  • off-set against future income tax (“Scenario 2“).

Scenario 1

Where the claim is made in one tax year for an investment in a previous tax year, the investor will receive a rebate. E.g. Investment made in tax year 2012/2013 + claim for relief made in tax year 2013/2014 = rebate

Scenario 2

Where the claim is made in the same tax year as the investment, the tax relief will be off-set against income tax to be paid in that year. E.g. Investment made in tax year 2013/2014 + claim for relief made in tax year 2013/2014 = off-set.

Investors generally prefer a rebate, so note that even in scenario 2, it is possible to request that the relief is applied to the preceding year. The rules allow for a one year “carry back”. However, there is no “carry back” before April 2012, as SEIS wasn’t applicable then.

The “carry back” could be used to split the tax relief across the two years for another reason: where the individual hasn’t paid enough income tax in one year to use the full 50% relief.

Deadline to claim income tax relief

The investor has between 5 and 6 years to claim the relief. To work out the deadline, take the date of the investment, fast forward to 31 January and add 5 years. For example, relief on an investment made in February 2013 could be made any time before 31 January 2019.

See how the rules for claiming income tax relief under the Enterprise Investment Scheme compare.

Income tax relief for investors under the Enterprise Investment Scheme (EIS)

Rate of relief

For investments made before 6 April 2011, the rate of income tax relief is 20% of the cost of the shares. For example, the income tax relief on an investment of £10,000 would be £2,000.

For investments made after 6 April 2011, the rate of income tax relief is 30% of the cost of the shares. For example, the income tax relief on an investment of £10,000 would be £3,000.

To be eligible for the relief, the investor must be a UK resident and pay income tax in the UK. Remember, it’s a tax relief; so the investor must be paying income tax to claim it

Investment limit

The annual tax relief limit is £300,000 which means currently an investment of up to £1,000,000 is possible per year.

When & how investors receive their relief

Depending on both the timing of the investment and the claim for relief, income tax relief will be received either through:

  • a rebate from HMRC (“Scenario 1“); or
  • off-set against future income tax (“Scenario 2“).

Scenario 1

Where the claim is made in one tax year for an investment in a previous tax year, the investor will receive a rebate. E.g. Investment made in tax year 2010/2011 + claim for relief made in tax year 2011/2012 = rebate

Scenario 2

Where the claim is made in the same tax year as the investment, the tax relief will be off-set against income tax to be paid in that year. E.g. Investment made in tax year 2013/2014 + claim for relief made in tax year 2013/2014 = off-set.

Investors generally prefer a rebate, so note that even in scenario 2, it is possible to request that the relief is applied to the preceding year. The rules allow for a one year “carry back”.

The “carry back” could be used to split the tax relief across the two years for another reason: where the individual hasn’t paid enough income tax in one year to use the full 20% or 30% relief.

Deadline to claim income tax relief

The investor has between 5 and 6 years to claim the relief. To work out the deadline, take the date of the investment, fast forward to 31 January and add 5 years. For example, relief on an investment made in June 2009 could be made any time before 31 January 2015.

See how the rules for claiming income tax relief under the Seed Enterprise Investment Scheme compare.