EIS

For Founders, By Founders

Overview and benefits

As part of our services to our clients, we help them raise finance for their growing businesses. Most growing business – the ones with gross assets worth under 15 million pounds – are eligible for the Enterprise Investment Scheme (EIS). Smaller companies at the seeding stage, might also benefit from the Seed Enterprise Investment Scheme (SEIS).

With these schemes your investors can get tax reliefs worth up to 50% of the money invested. This means they can significantly reduce their risk and makes them way more keen on offering funds for your startup.

You can raise up to 150 thousand pounds through SEIS investment. Any individual investor can invest as much as 100 thousand pounds in any tax year. In return, they get a tax relief of up to 50% of the value invested.

If you exceed the assets limit for SEIS, you can still benefit from its bigger brother: EIS.

EIS allows you to raise up to 5 million pounds per year, with a tax relief of up to 30% for your investor.

If your investor earns money from the sale of your shares after 3 years from the investment, they don’t pay any capital gains tax on the value earned.

Finally, if, unfortunately, your business goes bust, they get additional tax reliefs. That’s 22.5% of the initial investment under SEIS and 31.5% under EIS.

That’s loads of numbers! But the most important one is that the average IRR for investor is three times higher with EIS and SEIS. That makes them 3 times more likely to invest in your business.

Our Expertise

Applying to these schemes can require much time and effort, you’ll need a business plan, memorandum, last annual accounts and a cash flow forecast as well as your shareholder agreement and any prospectuses and documents targeted to potential investors.

As you probably know, on average, founders spend a third of their time trying to secure investment for their business. But we are here to help.

As ICAEW certified accountants, not only we can advise on structuring, eligibility and pitfalls to avoid before and after you raise capital. We also liaise with HMRC to obtain Advance Assurance of your eligibility and help you obtain investor certificates while making sure you are always compliant.

Come talk to us for a free hour of consultancy, we can help you figure out the best way you could benefit of these schemes and plan a successful round of funding for your business!

Request 1hr free consultation