Improvements to the Seed Enterprise Investment Scheme (SEIS)

The recent mini-budget announced positive changes to the Seed Enterprise Investment Scheme (SEIS), a scheme which provides income tax relief to individuals who invest in early-stage companies.

Currently, companies who qualify for the relief are able to raise up to £150,000 through SEIS investments but from April 2023 this limit will be raised to £250,000. In addition, the requirements for these companies to qualify for this investment will also be amended so that their gross asset limit will be increased from £200,000 to £350,000 and their age limit from increased from 2 to 3 years. This will be a welcome change for these companies who often look to these investments to help raise finance, especially at a very early stage.

The improvements also apply to investors, as the amount on which they can claim income tax relief is to be increased from £100,000 to £200,000.

While these changes will take effect from the new tax year, 6 April 2023, that doesn’t mean businesses will need to wait until then to take advantage of the improvements. SEIS rules come into effect on the date that the shares are issued. That means with some sound planning it will be possible, and in some cases desirable, to work the dates around the preparations for an equity investment round -for example via crowdfunding- so that the final completion work, including the issue of the shares, doesn’t take place until the new tax year. 

We may also be able to help you with your SEIS application. If you're still looking for investors or are in the early stages, then Advance Assurance will help you when you are pitching to potential investors. We partner with SeedLegals to help clients through the process of applying for SEIS and EIS with HMRC. Find out more here.  

(Note: At the time of writing 03/10/22 the required legislation to give effect to these changes had not as yet been passed by Parliament.) 

Author: Richard Mojel - Commercial Director ISQ