SEIS and EIS are tax incentive schemes launched by the UK government to encourage investment in small and growing businesses. SEIS stands for Seed Enterprise Investment Scheme, while EIS stands for Enterprise Investment Scheme. Both schemes offer tax relief to investors who purchase shares in eligible companies, with the aim of helping those companies to raise finance and grow.
SEIS is designed for early-stage startups, and offers investors up to 50% income tax relief on investments of up to £100,000 per tax year. EIS, on the other hand, is aimed at larger, more established companies, and offers investors up to 30% income tax relief on investments of up to £1 million per tax year.
SEIS (SEED ENTERPRISE INVESTMENT SCHEME)
This plan is intended to assist your business in raising capital as it begins to trade. It accomplishes this by providing tax breaks to private investors who purchase stock in your business.
SEIS is only open to UK-based, unlisted businesses that are under two years old, have fewer than 25 employees, and less than £200,000 in assets.
EIS (ENTERPRISE INVESTMENT SCHEME)
Similar to SEIS, this programme assists your business in raising money by providing tax breaks to individual investors. It is made to assist you in expanding your business.
A company must be based in the UK, unlisted, have fewer than 250 employees, less than £15 million in assets, and be under seven years old in order to qualify for EIS.
Both schemes have regulations that must be adhered to in order for your investors to claim and retain the tax benefits related to their shares. In addition, the shares issued must adhere to the same requirements. They must be fully paid up in cash at the time of issue, be full-risk ordinary shares, and possess no special rights to your assets and are not redeemable.