Investment Guides

What is EIS and SEIS?

EIS & SEIS
Lily Bridgwood
Written by Lily Bridgwood

What is EIS and SEIS?

Whilst neither of these tax-relief schemes are new, with the Enterprise Investment Scheme (EIS) first introduced over two decades ago back in 1994 & Seed Enterprise Investment Scheme (SEIS) arriving on the scene in 2011, there remains a high-level of dubiety over both concepts. This guide will seek to provide some clarity on the tax-relief schemes available for both businesses and investors.


EIS

The EIS seeks to help smaller, higher-risk trading companies to raise finance. This is done through offering tax reliefs to investors purchasing shares in such companies, incentivising investors through a reduced capital risk. The Tables below seek to provide a clearer overview of the tax benefits and qualifying criteria of both the EIS and SEIS.

SEIS

The SEIS was implemented in a quest to facilitate raising equity finance for small, early-stage companies. The SEIS has been widely recognised as a complementary feature to the EIS with the difference being that the SEIS acknowledges those ‘very-early stage’ companies, with much lower qualifying criteria (as shown in Table 1). As with the EIS, the SEIS tax reliefs are offered to individual investors in such companies.

Qualifying Criteria for Businesses

QUALIFYING CRITERIA DIFFERENCES EIS SEIS
Maximum Number of Employees 250 25
Maximum Gross Assets £16M £200,000
IHT 2 Years 2 Years
Minimum Investment Per Annum £1m £100,000
Minimum Amount Raised Per Company £16m £150,000

Tax Benefits for Investors

Tax Benefit EIS SEIS
Income Tax Relief 30% 50%
1st Capital Gains Tax Relief 0% (However, 100% of the gain will be deferred for the life of the investment) 50%
2nd Capital Gains Tax Relief 100% 100%
Inheritance Tax Relief 100% 100%
Loss Relief Yes Yes

Access the Equity Crowdfunding channel on OFF3R for a selection of EIS or SEIS eligible investments.


About the author

Lily Bridgwood

Lily Bridgwood

Lily is the Partnerships Associate at OFF3R. She has previous work experience in both the corporate and start-up environments. She joined the OFF3R team in October having recently graduated with First-Class Honours in International Business from the University of Edinburgh.