Do you need to raise capital for your start-up or growing business? We all know this can be difficult without a proven track record. However, the government looks to make this easier by offering a range of tax reliefs to investors that invest in qualifying businesses.
- The Seed Enterprise Investment Scheme (SEIS) applies to the very smallest start-ups, giving investors up to 50% income tax relief on their investment.
- The Enterprise Investment Scheme (EIS) applies to larger businesses, giving a 30% rate of relief.
- For those who prefer to invest through a fund structure, Venture Capital Trusts can make investments in qualifying businesses, and give similar reliefs to the investors in those funds.
These reliefs help reduce the cost of investment (and hence the cost of risk of business failure) to the investor. In the longer term, their gains may be free of Capital Gains Tax.
We assist a significant number of start-ups and growing businesses to help show that they qualify for the schemes and increase their attractiveness to potential investors.
If you wish to consider whether your planned capital raise will qualify for investor tax incentives, please get in touch.
Understanding the schemes
Seeking approval
Ongoing compliance
Investor support
Making the complex simple
Understanding the schemes
With the levels of tax relief on offer, HMRC is concerned with ensuring that tax relief is only available in respect of qualifying businesses and qualifying investments. Unsurprisingly, the rules are complicated. This is where our experts step in to review your business and your plans, confirm whether you qualify and advise you in simple terms what you can and cannot do.
Seeking approval
Businesses can choose to apply to HMRC for advance assurance that they qualify for the schemes. But without this confirmation, it is difficult to raise funds from investors who want the certainty of relief. We can apply to HMRC for you and present the complete information about the business, helping you receive HMRC’s confirmation quickly and painlessly.
Ongoing compliance
Even when you have qualifying status, you must still ensure that qualifying share issues are processed correctly and reported to HMRC so that certificates can be issued to investors where SEIS or EIS relief is claimed. In addition, the company must monitor its activities to ensure that it continues to fulfil the conditions of the schemes, and notify HMRC if relief needs to be withdrawn. We will assist with all of these requirements.
Investor support
As well as supporting growing businesses with EIS status, our Private Client team can also assist potential investors in understanding the benefits of the scheme, and the steps they need to take to secure relief and reclaim Income Tax due.
Making the complex simple
The complexities of the EIS legislation mean that most times, businesses believe that they do not qualify for the scheme. We have assisted businesses secure confirmation of EIS status from HMRC in the following situations:
- InsureTech and FinTech businesses, who believed they were excluded from relief because of their activities in the financial services sector
- Companies seeking to IPO on the AIM and Aquis Growth exchanges
- Companies over 10 years old who were entering new markets
- Businesses in the Natural Resources sector with activities worldwide but headquartered in the UK
- R&D businesses.
