Determine whether your company is eligible for SEIS.
As of April 6 2023, the eligibility criteria and funding limits for SEIS have been increased to encourage more startups to apply for the tax-advantaged investment scheme. This guide has been updated with the new changes.
The Seed Enterprise Investment Scheme (SEIS) is a government-backed scheme that encourages investment in early-stage and seed companies.
Investors are incentivised with generous tax reliefs to claim back part of their investment, and also enjoy zero capital gains tax on share profits, if the shares are held for at least three years, which makes the upside equally attractive.
You can raise up to £250,000 under SEIS, and your company is eligible for the scheme if it meets the following criteria:
- Trading for less than 3 years. Your company must be less than 3 years old at the time of the share issue. You can also not have started trading yet, and begin trading before or after receiving investment.
- Have a permanent establishment in the UK. An essential and substantial part of your business must be carried out in the UK, whether this is a physical site (factory, shop, office) or your main market.
- Not trading on a recognised stock exchange. When you issue the shares to SEIS investors, your company must not be trading on a recognised stock exchange and should have no arrangements to become a quoted (publicly listed) company at the time of the share issue.
- Doesn’t control another company that isn’t a qualifying subsidiary. If your company has any subsidiaries, they must also meet the qualifying trade requirements.
- Has never been controlled by another company. Since incorporation, your company has never been controlled by another company.
- Gross assets below £350,000 at the time of the share issue. HMRC’s general approach is that the aggregate value of your company’s gross assets would be as shown in its balance sheet, without any deduction in respect of liabilities, if you were to draw one up at the time the shares are issued. If your company is the parent of a group of companies, the limit applies to the aggregate value of gross assets of all the companies in the group.
- Fewer than 25 full-time equivalent employees. A full-time employee is someone who works 35 hours or more per week. If you have part-time employees, their hours are added together to make a full-time equivalent employee. For example, someone working 21 hours per week would count as 60% of a full-time employee.
- Never received investment from a VCT or EIS. If you have raised money from venture capital trusts or EIS in the past, you are ineligible for SEIS.
If you wish to apply for SEIS, our new advance assurance application guides you through the process from start to finish. We break down each question in great detail so you're not left scratching your head, plus our SEIS/EIS experts will review your application before submitting it to HMRC to give you the best chances of success.
And the best part, it’s free for Vestd customers on our Guided and Full Service plans. For all other plans, a one-off fee of £350 + VAT will apply.
Log in to your account and go to Share capital > SEIS/EIS in the side navigation bar for more details.
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