Services - EIS and SEIS
Accountants for EIS and SEIS
Startup life means always looking for the next injection of seed funding, searching for tax reliefs and exploring every minute possibility of more money to keep going. But not everyone finds an angel, and not everyone gets to be a unicorn without a little help.
One compelling reason to work with specialist startup accountants is because they not only know what you’re going through, they also make it their business to know of every potential funding source and tax relief you can avail yourself of. And the latest government incentive to encourage business? Meet EIS and SEIS, designed by the UK government to help smaller, higher-risk, early-stage companies to raise finance by offering generous tax breaks to investors.
Think of it as a way to make your startup more “investible” - startups are generally considered a higher-risk investment, which can be a barrier to them raising capital. By incentivising investors through tax relief, the government hopes to stimulate the small business economy.
Enterprise Investment Scheme (EIS)
Designed to offer the EIS tax relief to individual investors who buy new shares in your company, EIS helps you to raise up to £5 million each year to a maximum of £12 million over the company’s lifetime.
To qualify, you must be a UK registered business, not be trading on a recognised stock exchange and receive investment under a venture capital scheme within seven years of your first commercial sale. The new share issue must be used for a “qualifying business activity” - your startup accountant can advise. Importantly, be aware that tax reliefs will be withheld or withdrawn from investors if you don’t follow the scheme’s rules for at least three years after the investment is made.
Seed Enterprise Investment Scheme (SEIS)
Startups that are very much still starting up - those that have been trading for under two years - can make use of the Seed Enterprise Investment Scheme, receiving a maximum of £150,000 on which your investors can claim relief. Again, there are many rules to follow, and you’ll need to follow them strictly to ensure both your company and your investors are not penalised.
To make use of the SEIS tax relief, your company must be established in the UK, carry out a new qualifying trade, not be trading on the stock exchange. It must also ensure gross assets are valued at no more than £200,000 at the time of the relevant share issue, including the group’s assets if your company has any subsidiaries.
What else can startup accountants help with?
5. Filing the personal tax returns of the company’s directors
6. Filing the annual confirmation statement
A startup accountant does more than your tax return; the best become your business partner as you grow. What else can your accountant support you with?