SEIS (Seed Enterprise Investment Scheme) July 2023 Changes
What is SEIS?
SEIS is an investment incentive scheme for early-stage companies that enables investors to claim tax reliefs on their investments. New companies often struggle raising capital due to, among other things, the lack of an established trading history. However, by being able to issue SEIS qualifying shares, start-up companies can become significantly more attractive to investors.
50% of a qualifying investment can be offset against an investor’s income tax bill for the relevant year. In addition, investors can obtain capital gains reinvestment relief on gains unrelated to the SEIS investments by up to 50%. The investment itself will also be entirely exempt from inheritance tax and exempt from capital gains tax when the investment is realised.
More companies are now eligible for SEIS (and for greater investment amounts) following recent changes to SEIS that came into effect when the Finance Bill (No 2) 2023 received Royal Assent on the 11th of July 2023.
What are the changes to the scheme?
- Companies were previously able to raise up to £150,000 in SEIS, the new limit has increased to £250,000.
- Instead of companies being able to raise SEIS investment within the first two years of trading, companies are now able to raise monies within the first three years.
- There was previously a cap of £200,000 on the gross assets of companies seeking to raise SEIS, however the limit has now increased to £350,000.
- Individual investors can now invest up to £200,000 per tax year in SEIS which is double the £100,000 maximum that was previously in place.
What do these changes mean?
The increase in the maximum gross assets combined with the increase in the period a company is eligible for SEIS and the amount each company can raise means more companies can take advantage of the scheme. It is now more inclusive for companies that would have previously not satisfied the necessary thresholds.
Is my company eligible?
Along with the changes to the rules discussed above, there is other criteria that must be satisfied for a company to be eligible for SEIS.
There are numerous rules that applying companies will need to satisfy and comply with to qualify for SEIS. Care must be taken when submitting a SEIS application to ensure that the application is robust as can be, with little chance of rejection from HMRC.
Please read through our detailed blog here on the specific rules that a company will need to satisfy before they are able to raise investment pursuant to SEIS.
How can JLN help?
If you are interested in submitting a SEIS application, we offer a no-cost, no-obligation 20-minute introductory call as a starting point. Please email wewillhelp@jonathanlea.net providing us with any relevant information ensuring that any call we have is as productive as possible. After this call we can then email you a scope of work, fee estimate and confirmation of any other points or information mentioned on the call.
This article is intended for general information only, applies to the law at the time of publication, is not specific to the facts of your case and is not intended to be a replacement for legal advice. It is recommended that specific professional advice is sought before relying on any of the information given. © Jonathan Lea Limited 2023.
