More than 5,000 savvy investors picked up generous Seed Enterprise Investment Scheme (SEIS) tax breaks in the last tax year.
According to HM Revenue & Customs (HMRC), these investors snapped up £117.3 million of shares in more than 1,100 startup companies in the 2012-13 tax year.
The figures show SEIS triggered an immediate popularity with investors as Chancellor George Osborne only introduced the scheme in his Budget 2012, writes Stuart Smith of specialist SEIS web site SEIS.co.uk
SEIS allows startups to look outside of traditional debt funding from banks to private investors who can plough up to £100,000 into a company in the first year of the scheme.
Tax reliefs
As an incentive, investors can pick up lucrative income tax reductions and capital gains tax reliefs on assets sold to raise cash for a SEIS.
After the three-year SEIS ends, investors can exit by selling their shares tax-free.
Should a SEIS fail, loss relief against other income can be claimed.
Key points highlighted by HMRC in the latest report included:
- Technology startups raised 32% of total SEIS investment in the tax year
- 62% (£52m) of SEIS cash went to companies registered in London or the South East.
- 63% of investors claiming SEIS income tax relief staked less than £20,000 into startup companies qualifying for the scheme
- The average SEIS company raised £75,000 in funding
The HMRC statistics give investors and entrepreneurs an insight into which businesses are attracting funding – and how much of an appetite investors have for the market.
| SEIS: Investor and investment distribution | ||
|---|---|---|
| Investment (£) | Number of investors | Amount invested (£m) |
| £500 | 255 | £0.1 |
| £1,000 | 170 | £0.2 |
| £2,500 | 305 | £0.6 |
| £5,000 | 600 | £2.6 |
| £10,000 | 885 | £7.6 |
| £15,000 | 500 | £6.6 |
| £20,000 | 405 | £7.6 |
| £25,000 | 365 | £8.7 |
| £50,000 | 860 | £33.5 |
| £75,000 | 250 | £15.9 |
| £100,000 | 350 | £34.0 |
| Totals: | 4945 | £117.4 |
| Source: HMRC | ||
| SEIS: Investment by company | ||
| Investment (£) | Number of companies | Amount invested (£m) |
| £10,000 | 95 | £0.6 |
| £25,000 | 160 | £3.0 |
| £50,000 | 220 | £8.4 |
| £100,000 | 305 | £24.7 |
| £150,000 | 340 | £47.1 |
| Totals: | 1120 | £83.8 |
| Source: HMRC | ||
| SEIS: Investment by industry | ||
| Industry | Number of companies | Amount invested (£m) |
| Technology | 380 | £26.5 |
| Business services | 245 | £18.6 |
| Distribution and catering | 165 | £12.3 |
| Leisure activities | 125 | £10.9 |
| Manufacturing | 95 | £6.8 |
| Other services | 40 | £2.6 |
| Energy and water supply | 35 | £2.9 |
| Transport and communication | 20 | £1.1 |
| Construction | 15 | £1.0 |
| Agriculture | 10 | £1.0 |
| Totals: | 1130 | £83.7 |
| Source: HMRC | ||
| Notes: HMRC points out some of the data is provisional and totals are rounded up | ||
