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Business Services  •  Business Tax  •  Personal tax

Enhancements to SEIS

By RJP LLP on 13 October 2022

The SEIS (Seed Enterprise Investment Scheme) is a vital source of funding for start up companies. It is also useful for high-net-worth individuals who wish to invest in early stage businesses in a tax advantaged way.

The September Mini Budget included an announcement of changes to the SEIS, to become effective in April 2023. The changes will enable young companies to raise funds of up to £250,000 under the scheme  - the current limit is £150,000. The good news is that this is available to companies that have already secured SEIS funding and wish to raise further money as well as to new applicant companies looking for their first investment.

Here's what you need to know about the SEIS investment enhancement

SEIS currently allows companies to raise up to £150,000 in finance under the scheme. Investors are able to obtain 50% tax relief on the amount invested in an SEIS approved company.

From April 2023, the investment threshold will rise to £250,000 and the same 50% tax relief will remain for investors.

There are other positive changes to be aware of, which take effect in April 2023.

  • Companies can now raise SEIS finance within the first 3 years of trading, previously it was only available for the first 2 years. This means companies that already used SEIS to raise finance can secure fresh investment provided they do so within the 3-year time limit. Note this time frame applies to trading periods, so a company could have been in existence for a longer time period and still qualify under the 3-year rule, providing that trading does not precede this timeframe.
  • Companies must have less than £350,000 in gross assets to be able to raise funds under SEIS, previously the asset limit was £200,000.
  • Investors also benefit from the new rules. From April 2023 the maximum amount that any taxpayer can invest with the benefit of SEIS relief will increase to £200,000 per tax year, doubling the relief currently available.

The changes to SEIS are due to take effect at the start of the 2023-24 tax year on 6 April 2023, unless the government makes a U-turn, which is entirely possible.

We will be monitoring developments to see if these improvements do go ahead as planned. Any changes or reversals will be reported as they occur.

If you are interested in the tax reliefs available for SEIS investments please contact us via partners@rjp.co.uk.

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