I have received an offer of a £130k grant a UK grant funding agency in respect of our startup. We also intend to raise some money from angel investors as a first round of equity funding. We believe investors will qualify for the SEIS tax reliefs but have yet to make an advance assurance application to HMRC. We note that ‘state aid’ can be a factor that prevents a company qualifying for SEIS but that SEIS operates under de minimis rules, allowing a company to receive up to €200,000 over a three-year period fiscal period and that a company can receive funding under a notified scheme and also a de minimis scheme at the same time.
How does this impact on the SEIS monies we intend to raise?
You need to check the grant funding agency documentation to see that the grant qualifies as ‘de minimis’ state aid. The regulations allow up to €200,000 of de minimis state aid in a rolling three-year period.
If so then if your grant is £130,000 this means that if the company qualifies for SEIS then the balance of £20,000 (up to the £150k SEIS threshold) can be used by investors to claim SEIS tax relief on, while other investors not subscribing for the first £20,000 SEIS monies can instead get EIS relief on their investments. You will need to make a SEIS & EIS advance assurance application (with all relevant info) in order for HMRC to confirm this in writing.
However, note that if you raise the investment and issue the shares before accepting the grant funding it seems then investors will be able to get the full amount of SEIS relief available (again, check this point with the grant funding agency), see here for further info: https://www.kingstonsmith.co.uk/insights/state-grant-tax-relief/