This seminar examines the thinking behind SEIS and EIS, two tax attractive schemes available to UK companies seeking investment. It also examines the qualifying factors on whether a company will be able to seek the relief, whether the individual investor acquiring the shares is a qualifying investor and a summary of the hurdles and tripwires to avoid.

1. What we will cover
 What is the thinking behind SEIS and
EIS
 Summary of hurdles
 Tripwires

2. SEIS
• Hard for Companies to get funding from
Banks
• Low interest rates on savings
• SOLUTION? SEIS and EIS

3. SEIS – Headline Benefits
• Invest up to £150,000
• Individual up to £100,000
• Income tax relief 50%
• No CGT
• Further income tax relief
if Company fails
• it

4. SEIS

5. • Must be a company
• Unquoted
• Assets of less than £200,000 pre-
SEIS
• Must not be controlled by another
company
• Maximum SEIS £150,000
• Qualifying Trade
SEIS Company Criteria
SEIS Company Criteria

6. • Most property based trades don’t
qualify
• Lawyers, Accountants and Banks
don’t qualify
• Service based trades may qualify e.g.
Financial Advice
• Up to 20% Excluded Activities OK
Qualifying Trade
Qualifying Trade

7. Individual
• Not an associate (business partner,
spouse, parent, grandparent)
• Siblings OK
• UK tax payer
• Not a reciprocal arrangement
• Not an employee (directors OK for
SEIS, angel directors OK for EIS)

8. What if it doesn’t work out?

9. If the Company Fails
• If the Company fails investor can offset
loss against income tax at whatever rate
of tax you pay.
• E.g. Salary = £50,000; pay approximately
£9,800 tax
• Initial Investment = £10,000
• Initial SEIS relief = £5,000
• Company fails = up to 45% relief set
against tax

10. Trip Wires
• Make sure have a bank account
• Beware benefits e.g. repayment of loan
• Controlled by a Company
• Not a Qualifying Trade
• Associates
• Hold shares for 3 year minimum

11. Legal Considerations
• Legal Considerations
• Don’t jeopardise future investment
• Drag Along
• Minority Protections e.g. Tag along, pre-
emption rights, voting thresholds
• al Consideration

12. EIS Company Criteria
• Must be a company
• Unquoted
• Assets of less than £15,000,000 pre-EIS
• Must not be controlled by another
company
• Maximum EIS per person £1,000,000
• Total Venture Capital £5,000,000 p/a
• Fewer than 250 employees

13. EIS Tax Benefits
• 30% Income tax relief immediately
• No CGT
• Loss Relief to amount of loss set against
income tax or capital gains
• E .g invest £100,000, initial tax relief
£30,000. Business fails – can use loss
relief at 45% (if that is your income tax
relief) on £70,000 cash invested – net loss
£38,500 (loss relief @45% = £31,500)