Tax reliefs have annual limits
A minority stake in your business
Very early-stage (i.e. seed) businesses who meet the eligibility criteria
The Seed Enterprise Investment Scheme (SEIS) is a government tax-relief scheme that incentivises private individuals to invest in very early-stage (i.e. seed) businesses. This scheme allows any individual to invest up to £100,000 every tax year and receive a 50% tax break. Any business can raise a maximum of £150,000 in SEIS funding in its lifetime.
SEIS is the younger sibling of the Enterprise Investment Scheme (EIS). Launched by the government in 2012, it encourages investors to finance very early-stage (i.e. seed) businesses by providing even more generous tax breaks than EIS, to compensate for the higher risks.
Note: from April 2023 the amount a business can receive in SEIS funding is going up to £250,000, the amount an investor can contribute is going up to £200,000, and the maximum age of the business able to take advantage of the scheme is increasing from 2 yrs to 3 yrs.
Your business might be eligible for a SEIS investment if:
Enterprise Investment Scheme (EIS) – The Enterprise Investment Scheme (EIS) is a government tax-relief scheme that incentivises private individuals to invest in early-stage businesses. EIS allows an individual to invest up to £1m per tax year and get a 30% tax break. Any single business can raise up to £12m in EIS funding in its lifetime.
Social Investment Tax Relief (SITR) – Social investment tax relief (SITR) is a government scheme that incentivises private investment in social enterprises (i.e. businesses that generate a positive social impact). The rules for both investor and social enterprise are similar to those for Enterprise Investment Scheme (EIS). The government introduced Social investment tax relief (SITR) in 2014. At the time, private individuals investing risk capital into early-stage mainstream businesses were already benefiting from the EIS and SEIS schemes, so SITR was seen as a way of levelling the playing field for social enterprises. The government defines social enterprises for SITR purposes as:
Venture Capital Trusts (VCT) – Venture capital trust (VCT) is a listed company that has been approved by HMRC to invest in – or lend money to – unlisted companies. It’s one of four government schemes designed to encourage individual investors to put money into high-growth businesses. A VCT is run by a fund manager who provides private investors with a tax-efficient means of investing in high-growth companies, under Enterprise Investment Scheme (EIS) rules. Investors buy shares in a VCT and thereby get access to a basket of small businesses. They can invest by subscribing to new shares when a trust is launched or by buying shares from other investors after the trust has been established.
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