Investments

SEIS And EIS Funding Break Records

Tax breaks under the Seed Enterprise Investment Scheme (SEIS) have encouraged investors to plough hundreds of millions of pounds into more than 3,000 startup companies.

Since the tax incentive started in April 2012, almost 3,000 companies have raised £255 million, according to the latest statistics published by HM Revenue & Customs (HMRC).

The figures cover until the end of the 2013-14 tax year.

Since SEIS was launched, 1,165 companies received funding of £87 million in 2012-13, while this jumped to more than 2,000 companies picking up £168 million in investment in 2013-14.

In 2013-14, investors staked £152 million in first round funding in 1,750 companies.

The average investment is more than £81,000 for each company.

Tax breaks for investors

SEIS investors receive income tax repayments of 50% of the amount of money first staked in a startup company.

The value of shares grows tax-free and if the company fails, loss relief against other income is available.

HMRC also published data on the SEIS sister scheme, the Enterprise Investment Scheme (EIS).

Since EIS was launched in the 1993-94 tax year, almost 23,000 companies have raised more than £12.3 billion.

Investors have similar tax breaks to SEIS, but instead of a 50% income tax refund, they receive 30%.

In 2013-14, EIS investors put up a record £1.563 million for 2,795 companies, compared to £1.033 million for 2,470 companies in the previous tax year.

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First SEIS exits due

First time funding totalled £872 million – up from £576 million in 2012-13.

The previous peak was £1,065 million of funding raised in 2000-01, although the previous high for the number of companies was 3,315, also in in 2000-01.

EIS aims to aid SME companies in high-risk sectors raise finance by offering tax incentives to investors.

SEIS is focussed on entrepreneurs with smaller startups.

The first SEIS companies will emerge from the program from April 2016 as shares in startup companies have to be held for a minimum of three years to qualify for the tax breaks.

Investors can deal directly with pre-approved EIS and SEIS companies or put money into companies via specialist funds or through crowdfunding platforms.

HMRC will publish the next EIS/SEIS statistics in April as well.

SEIS Guide

The SEIS GuideiExpats recommends getting a copy of the SEIS Guide. The guide is divided into a section aimed at investors, and one targeting entrepreneurs. It is the first port of call for those looking to enter into a scheme which has seen incredible growth in popularity in the last few years.

The guide is downloadable from SEIS.co.uk , and provides an easily digestible source of vital information for anybody who could benefit from the scheme.

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