Whilst not quite as attractive as the incentives under SEIS, the Enterprise Investment Scheme incentive is an equally important tool for raising finance, given that it can be claimed after a company has reached the £150,000 cap of investment under SEIS.
The main reliefs for investment into a qualifying Enterprise Investment Scheme business include:
1) Cash Back – relief against income tax at 30% of the lower of:
- the purchase price paid for the investment in shares; or
- the sum of £1 million.
2) Tax-Free – Exemption from capital gains tax on a subsequent sale of the shares you originally invested in.
Many of the conditions for Enterprise Investment Scheme relief are identical to those of SEIS, however notable differences include:
- the company must have fewer than 50 full-time employees;
- the gross assets of the company must not be more than £7 million before the issue of shares or £8 million immediately afterwards; and
- the company must not raise more than £2 million in any 12 month period from a combination of Enterprise Investment Scheme, the corporate venture scheme and venture capital trusts.
Contact our Corporate Finance team