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). Even smaller companies at the seeding stage, might also benefit from the Seed Enterprise Investment Scheme (SEIS).
These schemes mean that your investors can get tax reliefs worth up to 50% of the money invested, significantly reducing their risk and making 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 for a tax relief of up to 50% of the value invested.
If you exceed the assets limit for SEIS, you can still benefit from EIS, which 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.
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, which makes them 3 times more likely to invest in your business.