EMI share scheme for small business
Tax efficient rewards for your employees
We specialize in creating a tax-efficient EMI Scheme tailored to suit your business needs and facilitate growth.
Our services include handling all interactions with HMRC, submitting necessary paperwork, and making any necessary adjustments along the way.
Raising capital for your start-up
Securing the essential funding for a start-up company can be a challenging task when it comes to persuading and convincing potential investors. This difficulty can arise due to factors such as limited trading experience, insufficient collateral assets, or a perceived higher risk level. However, the Seed Enterprise Investment Scheme (SEIS) aims to incentivize aspiring entrepreneurs to invest by offering a tax benefit.
What is SEIS
The purpose of this program is to assist your company in raising funds during its initial trading phase. Furthermore, individual investors who acquire shares in your company will be eligible for tax advantages as a result of their participation.
How does the SEIS scheme work?
If you meet the eligibility requirements, you have the potential to receive up to £150,000. This maximum amount includes any future investments received from government subsidies and incentives during the three-year period leading up to and including the anniversary of the original investment.
To qualify for the full amount of tax relief, your company must fulfill certain criteria throughout the duration of the scheme. If the relief is revoked, investors may be liable to pay tax on their income as per the scheme’s regulations.
HMRC expects the funds raised through the issuance of shares to be utilized effectively in qualifying business activities, specifically for growth purposes, within three years from the date of issuance.
Qualifying Criteria
There are various conditions to be met for the company to qualify for the SEIS scheme. The company must:
- Be a company which is trading commercially
- Permanently established in the UK
- Less than 2 years old
- Have fewer than 25 employees
- Less than £200,000 in assets
- Trading for at least 4 months before they can be eligible for SEIS
- Not trading on a recognised stock exchange at the time of the share issue and do not plan to do so
- Not in any financial difficulty
What is EIS?
This program, similar to SEIS, aids your company in generating funds by offering tax advantages to individual investors. Additionally, its purpose is to support your business expansion.
Certain regulations must be adhered to in both programs to ensure that your investors can qualify for and retain the tax benefits linked to their shares.
Both programs necessitate strict compliance with specific criteria for the issued shares. For instance, they must be paid in full with cash at the time of issuance and must be ordinary shares with full risk.
How does EIS work?
Your yearly fundraising limit can reach up to £5 million, and your total limit over the lifespan of your company, including funds acquired from other programs and incentives, can reach £12 million.
It is crucial that your company secures investments under the scheme within the initial seven years of conducting commercial operations.
Specific regulations apply to knowledge-intensive industries (e.g., healthcare, education, and science), which grant extensions to the time and investment limits.
Please be aware that any funds obtained from alternative venture capital schemes must be acquired within seven years from your company’s initial commercial sale.
Why Choose Us
Taxcellent in Telford specializes in assisting businesses in maximizing the benefits of investments through SEIS and EIS.
Throughout the investment period, we will ensure that your business fully adheres to all necessary requirements.
We will promptly address any inquiries from HMRC to expedite the approval process for your preferred scheme.
Enhance the attractiveness of your investment proposal so that once it receives approval from HMRC, you can attract significant investments.
We will handle your tax returns diligently to ensure you receive the appropriate amount of tax relief.
With the assistance of our trusted partner Seed Legals, a team of experts in funding and legal matters, numerous entrepreneurs have successfully raised funds and witnessed the growth of their businesses.
SEIS offers very generous tax reliefs to investors:
50% tax break up to £100,000 annual investment.
50% tax relief on capital gains if sold within three years and reinvested in other SEIS companies.
Loss relief if the investment value decreases.
The two-year holding period for inheritance tax relief.
Tax benefits for EIS investors
On annual investments of up to £1 million, a 30% tax break is available. Up to £2 million in EIS funds must be invested in knowledge-intensive businesses.
If you hold EIS shares for the qualifying period, you can avoid paying capital gains tax and keep your income tax relief.
You can deduct losses on the sale of shares against income in the year sold or the previous year, which may be preferable to set it against a year’s capital gains.
The value of the shares is exempt from inheritance tax after two years.
Partnership with Seed Legals
Seed Legals has devised an EMI plan customized to perfectly match your company’s requirements and expansion goals, ensuring optimal tax efficiency. They will handle all communication with HMRC, handle the filing of essential documentation, and implement any essential modifications. All of this comes at an exceptionally competitive flat rate that is completely transparent and unbeatable in its value.
Apply for SEIS/EIS in a simple and intuitive workflow
After Seed Legals prepares your application form, cover letter, and HMRC checklist, they will then have their team of EIS/EIS experts review them.
Review of all documentation
Seed Legals will handle the entire application process, guaranteeing strict adherence to the latest HMRC guidelines for a dependable approval that you can rely on.
Speak to one of our specialist accountants today!
Please get in touch with our specialist tax team to find out more about how we can help you with your SEIS or EIS application and any tax needs.
FAQs
What is the difference between SEIS and EIS?
The acronym SEIS stands for Seed Enterprise Investment Scheme and primarily targets start-ups, whereas EIS, which stands for Enterprise Investment Scheme, is designed for relatively established small and medium-sized businesses.
Start-ups eligible for SEIS are often considered higher-risk investments, leading to more generous tax benefits being offered to investors.
What documentation do Seed Legals send to HMRC?
You will need to have at least the following prepared:
1. A business plan or pitch deck.
2. Projected financials for a three-year period.
3. Share register.
4. Application form, cover letter, and checklist.
Additionally, you should be ready to provide the following documents:
1. Company accounts.
2. Bank statement.
3. Details of previous investment and de minimis aid.
4. Letter of engagement from your crowdfunding or investment partner.
5. Articles of Association.
6. Investment Proposal or Termsheet.
Do I need Advance Assurance?
If you are still seeking investors or are in the early stages, Advance Assurance can help you in pitching to them. Prior to investing in SEIS/EIS, many investors typically require HMRC Advance Assurance. However, if your investors are willing to invest without considering the tax benefits, you can bypass the need for Advance Assurance.
Who can access SEIS funding?
- Information tech companies
- Ecommerce marketplaces
- Mobile App development
- Medical research
- Charities/non-profit organisations
- Hospitality sector
Which trades do not qualify for SEIS?
While it is an extensive list, the most commonly encountered sectors include Property Development, Banking or Insurance, Accounting or Legal Services, and Farming.
Do I need to be incorporated and registered for Corporation Tax to apply for Advance Assurance?
Indeed, incorporation is a requirement for obtaining Advanced Assurance. However, registration for Corporation Tax is not necessary to obtain this assurance.
How can I be sure I'll make money if I invest in an SEIS company?
Every investment carries inherent risks, but the availability of tax benefits significantly mitigates these risks.