The Enterprise Investment Scheme (EIS) and the Seed Enterprise Investment Scheme (SEIS) are tax incentive schemes from HMRC to promote investment into high risk businesses (this includes most startups).
Both the business and the individual investor must qualify. Whether the individual investor qualifies depends on his or her personal circumstances. Whether a company qualifies depends on its structure, its line of business and its behaviour both at the time of the investment and in a defined period (currently 3 years) after the investment. This is important; investors will be rather unhappy if they have made an investment thinking that the company will be eligible for the tax relief, only to find out later that the company has fallen outside the rules due to its actions or non actions.
The reliefs available to investors are extremely generous and include income tax relief, capital gains tax deferral, capital gains tax exemption and loss relief. The availability of the reliefs can often be the clincher in securing an investment. Conversely, a lack of knowledge of the reliefs is unlikely to impress a potential investor.
We can provide information on the key tax reliefs, eligibility and compliance – and we aim to do it as simply as possible.