Transcript
What we will cover
What is the thinking behind SEIS and EIS
Summary of hurdles Tripwires
SEIS
• Hard for Companies to get funding from Banks
• Low interest rates on savings• SOLUTION? SEIS and EIS
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
SEIS
• 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
• 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
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)
What if it doesn’t work out?
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
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
Legal Considerations
• Legal Considerations• Don’t jeopardise future investment• Drag Along• Minority Protections e.g. Tag along, pre-
emption rights, voting thresholds• al Consideration
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
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)
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