5 Reasons SEIS is vital for a StartUp

The Seed Enterprise Investment Scheme (aka SEIS) is a tax relief scheme that allows investors to invest into a new company and claim up to 50% of the amount of their investment back from HMRC as a deduction from their income tax bills. StartUps often require a significant amount of financial investment in order to launch and grow. SEIS is a great way to attract investors and is increasingly driving the investment market in London.  So here are the 5 main reasons why SEIS qualification is vital for a StartUp.

1).  An Investor can receive initial income tax relief of up to 50% on the amount of his investment up to £100,000 into a qualifying company per tax year. The investor must have been issued with shares and must not have any preferential rights.

2). An individual’s stake in a company can be no more than 30% and he cannot demand onerous terms. This helps founders to remain in control of the company and its strategic direction.

3).  Investors must hold their shares in the company for at least three years if they want to retain their relief. This provides the company with a stable group of investors who hopefully are incentivised to follow on and invest in future rounds.

4). SEIS is only currently available for UK based companies. This is in turn drives investment into the local home economy and compliments the current desire for “British” commerce.

5).  The company taking the investment must not have prepared to carry on its trade for more than 2 years. This gives the highest tax reliefs to investors in new companies allowing new entrants access to finance.

For further information on whether your StartUp is eligible for SEIS, contact www.buckworthsolicitors.co.uk or call one of the team on 020 7952 1723.