Enterprise Investment Scheme (EIS)

If you are looking to raise funds to support a new business venture, grow your company or embark on R&D activity, the ‘Enterprise Investment Scheme’ (EIS) or SEIS, the ‘Seed Enterprise Investment Scheme’ which is the equivalent initiative for start ups, is a very useful initiative.

We can help company owners, investors or an existing management team looking to finance a management buyout (MBO) take advantage of EIS and the tax relief it offers.

RJP can help you to ensure you have the right company structure in place to obtain EIS approval from HMRC. This will reassure investors that the investment they make will qualify for EIS or SEIS tax reliefs. For some clients, this early stage tax planning enables them to raise funds for research and development, which means the company can also qualify for R&D tax relief in the future.

Qualifying for the Enterprise Investment Scheme

If you have an unquoted company and the opportunity exists to attract investment through the EIS you can obtain advance assurance from HMRC that your company qualifies, and this will provide comfort for investors. The company will need to meet certain criteria as follows:

Company criteria

It must be a qualifying trading company or the parent company of a qualifying trading group. Companies dealing in property are not eligible, and certain other types of business are not eligible
A minimum of 50% of the qualifying trade must be carried out in the UK and the business must have a permanent establishment in the UK
Gross assets must not exceed £15 million before the EIS share issue
The company must not have more than 250 employees
A maximum of £10million can be raised through EIS in any 12-month period

Investor criteria

In order to qualify for income tax and capital gains tax relief, investors must satisfy certain conditions, including the following:

Shares must be ordinary with no preferred rights and must be held for at least three years
The shareholding must not exceed 30% of the issuing company either alone or when aggregated with associates. This is measured either by share capital, share capital and loan capital combined or voting rights
The investor must not be employed by the issuing company, subject to an exception for certain paid directors or if specific conditions for MBO apply

Qualifying for the Seed Enterprise Investment Scheme (SEIS):

Criteria for business start-ups

The company must have been trading for less than two years or preparing to continue a new business
It must have less than 25 employees and own assets of less than £200,000
The maximum amount of all SEIS investment together with any other state aid received by the company in a three year period must not exceed £150,000
If a start up business needs to secure a larger amount of funding than £150,000 it is possible to combine both SEIS and EIS investments, but the application for EIS cannot be made until 70% of original funds obtained through SEIS have been utilised
As with EIS, an investor under the SEIS scheme is not able to own more than 30% of the shares of the company
It’s not possible to apply for SEIS if a company has already participated in EIS, but it is possible to apply for EIS following SEIS

Do you need to raise funds?

Why not come in and meet us or give us a call?

5 ways Rachel Reeves COULD increase tax in the Autumn Budget

Now that the Autumn Budget date has been confirmed for 30 October, speculation surrounding what taxe...

By RJP LLP on 5 September 2024

Business Services • Business Tax • Personal tax

HMRC launches crypto tax avoidance crackdown

HMRC has launched a new campaign to ensure that UK taxpayers are accurately declaring and paying tax...

By RJP LLP on 27 August 2024

Business Services • Business Tax • Personal Taxation

HMRC targets dog breeders for tax compliance campaign

The latest anti avoidance campaign by HMRC is targeting dog breeders for potential tax shortfalls. T...

By RJP LLP on 27 August 2024

I wanted to write and express our gratitude for your help and hard work in getting Probate through and settling all the taxes. I am so pleased that we selected RJP, as your professional help and updates throughout this process have been invaluable. If at any time in the future Probate assessment may be needed, you will be our first port of call. Once again, many thanks to the whole team.

Dan Cook, Probate client

I just wanted to drop you a short note to say how grateful I am for the support that RJP has provided over the past 4 weeks while our Financial Controller was away. I struggle to comprehend how much work your staff get through during their weekly visits and they are always a pleasure to have around the office.

I Evans, CFO, Mobliciti

Just a quick e-mail from me to thank you for achieving the target for producing the draft accounts – it is very much appreciated and gives a first class impression of your firm. Many thanks.

J Stanfield, Chairman, BBS Actuaries Ltd

I would like to take this opportunity to thank you very much for the amazing job you have done navigating us through this whole process. My family and I also really appreciate the care and compassion demonstrated by you and your team in every dealing. Our thanks to everyone.

M Goldsmith, Probate Client

RJP provide our company with a complete service which takes the stress and strain away from the day to day running of our accounts! Their understanding of our business and their patience and advice is invaluable.

Outsourcing Client

60 Day Deadline for CGT Returns and Tax Payments

If you sell a property and incur capital gains tax on the transaction, you will need to file a tax return and also pay any tax that is due within 60 days of completion, or penalties will arise. Need help with your property taxes? Talk to us.

Get in touch