SEIS Funding Raising £1.3m A Week

Posted on 11th November 2013

The government’s Seed Enterprise Investment Scheme (SEIS), which is aimed at encouraging investors to fund UK start-ups, has invested £82m in firms over the last 18 months.

According to new figures released by the Treasury, despite a sluggish start last year when it was launched by Chancellor George Osborne, 1,100 firms have now applied for “advance assurance” through HM Revenue & Customs (HMRC) to ensure that they would qualify for the scheme, raising £82m so far, which averages out at £1.3m every week being raised by 19 firms.

Under the terms of SEIS, investors are offered income tax relief of 50 per cent, with no capital gains tax on any profit from start-up investments of up to £150,000. In addition, during the 2012/13 tax year, investors can reclaim the full amount of tax paid if they reinvest that money into another SEIS-backed start-up venture.

The remit of the SEIS is very wide. Businesses must have assets worth no more than £200,000 to be eligible for investments; employ no more than 25 people and must be no more than two years old when they start soliciting investments.

Some businesses in a handful of sectors of the economy are excluded from the SEIS, notably financial services firms, and some of the provisos apply only at the time the relevant shares are issued, while others must be met continuously, either for the entire period from date of incorporation to the third anniversary of the date of issue of the shares, or, in some cases, from the date of issue of the shares to the third anniversary of their issue.

However, if a company ceases to meet one or more of those conditions, investors may have their tax relief withdrawn.

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