December 14, 2022 Updates to the SEIS Explained
In the September mini-budget, the former chancellor announced the Seed Enterprise Investment Scheme (SEIS) would be expanded from April next year, one of the few announcements that hasn’t since been reversed.
Our experts have summarised the updates to the scheme, and what it means for you.
Currently, a company can raise a maximum of £150,000 through SEIS within the 3-year period up to and including the date of the investment. From 6 April 2023, this will increase to £250,000.
Similarly, the amount an investor can claim income tax relief on has been doubled from £100,000 to £200,000 per tax year. This is also coupled with the ability to carry back a claim so an investor could theoretically make £400,000 of investment in 2023/24 and receive £200,000 of relief over the two tax years.
Length of Trade
At the moment, a company must not have been carrying out a qualifying trade for more than 2 years. From April 2023, this is being extended to 3 years. Note, this is how long the trade has been going, not the age of the company.
From 6th April 2023, the Gross Assets of the company at the time of the share issue will increase from £200,000 to £300,000.
As with the current SEIS rules, no shares can be issued under SEIS if an EIS compliance statement has been submitted to HMRC. Therefore, if a company has already issued shares within EIS, unfortunately, they would not be able to take advantage of these increased limits.
It would be possible for a company to raise funds under these increased limits now, with the use of an Advanced Subscription Agreement, whereby an investor pays for the shares now but the company doesn’t issue them until after 6th April 2023.
If you’d like to discuss any of these changes or would like any further information regarding any of HMRC’s Venture Capital Schemes, please contact us and speak to one of Elemental’s tax experts.