If you are launching a start-up in the UK today – right this minute perhaps – then these four letters: SEIS, are your new best friend.<\/p>\n
Why? Because qualifying for SEIS (or the Seed Enterprise Investment Scheme) means your start-up becomes an even more attractive proposition to investors than it already was.<\/p>\n
And even if you are not launching right now but have done so within the past 20 months then SEIS is still for you – although you’ll have to move pronto to stay within the qualifying limits of having traded for less than two years.<\/p>\n
To dive further into this swimming pool of opportunity, Legal Geek spoke to four doyens of SEIS to gain their thoughts and advice: Genevieve Moore<\/a> from Blick Rothenberg, Tom Wilson<\/a> from Seedcamp, Jamie Whitcroft<\/a> from Passion Capital, and the taxman as well.<\/p>\n Tom Wilson<\/strong>: In a nutshell, SEIS provides tax incentives for investors to invest in early stage companies. Companies can raise up to a maximum of \u00a3150,000 through the scheme but the money must be used within three years. For investors, 50% of the amount invested (on an annual limit of \u00a3100,0000 investment) can be used as an income tax reduction.<\/p>\n Genevieve Moore<\/strong>: Investors cannot be employed by your company, or associated to any of your employees (although there is a carve out for directors). Nor can any investor hold more than 30% equity in the company \u2013 for the purpose of calculating this, shareholdings of associates are taken into account, so often family are prohibited from qualifying on their investment, but friends will often qualify.<\/p>\n The Taxman (via the HMRC website)<\/strong>: You can apply if your company:<\/p>\n Genevieve Moore<\/strong>: Know the rules and know its limits as well. Before you start receiving investment funds you should seek advance assurance from HMRC that the company qualifies. Don\u2019t delay applying for advance assurance either as it can take months to receive from this, although HMRC are committing to reducing the time it takes to process advance assurance requests over the coming year.<\/p>\n Genevieve Moore<\/strong>: You need to have a clear idea of how\u00a0much of your company you\u2019re giving away for the investment, and what\u00a0rights the\u00a0incoming\u00a0shareholders\u00a0will\u00a0have. If you end up with 10 investors each with a\u00a05%\u00a0stake in your company, that\u2019s\u00a050% of your company you\u2019ve given away.\u00a0 You need to think about how you will manage this, and whether you are comfortable giving up your control. It\u2019s also important to remember that the company has to remain a qualifying company for at least three years after the investment has been made or the investors will lose their tax relief. This requires ongoing monitoring.<\/p>\nLet\u2019s start at the beginning, what is SEIS?<\/strong><\/em><\/h2>\n
Sounds great. Am I eligible to apply?<\/strong><\/em><\/h2>\n
\n
Is SEIS the right option for me?<\/b><\/em><\/h2>\n