David Brookes
Tax Partner / Lead Partner Reading and Bristol offices
Why consider enterprise investment tax relief?
Do you need to raise finance to grow your company? Are you considering equity investment. The HMRC tax relief schemes to encourage and incentivise investment will be key to achieving your goals. Securing ‘advance assurance’ from HMRC will give investors the confidence they need that their investments will be as tax efficient as possible.
Alternatively, you may be a venture capital fund looking to ensure that you a in a position to make qualifying investments. Or you may be a High Net Worth family or individual looking to make tax-efficient investments. We can advise on the most appropriate structures and on investments.
We help companies to obtain ‘advance assurance’ for the relevant invest tax relief scheme. The application for ‘advance assurance’ requires a detailed report on the company and the share issue to be submitted to HMRC. Our experience of producing the required reports and of working with HMRC means that you can be confident that your application will be robust.
We advise clients on how to maximise the benefits of all three schemes available in combination as well as individually. We also review Articles and shareholder and investment agreements, help produce prospectuses and marketing documents and making Compliance Statements to ensure that all these meet HMRC expectations.
Our clients include university spin-outs, innovative high tech companies, leisure, media and retail businesses.
Below you will find more information on the three HMRC schemes, the eligibility criteria and benefits.
Seed Enterprise Investment Scheme – SEIS
The Seed Enterprise Investment Scheme encourages investment in start-ups and smaller companies with fewer than 25 employees in higher risk areas. The investments allowable under the scheme are smaller, up to £100,000, but the potential tax reliefs are greater than for the Enterprise Investment Scheme (EIS).
Enterprise Investment Scheme – EIS
The enterprise Investment Scheme is open, in simplest terms, to unquoted trading companies that have fewer than 250 full time equivalent employees and assets of less than £15m. However, the complete eligibility rules are complex with a number of requirements and exclusions. The limits on investments are much higher.
Both the SEIS and the EIS provide income tax relief, Capital Gains relief and exemptions, loss relief and Inheritance tax relief.
Venture Capital Trust - VCT
Venture Capital Trusts (VCT) are vehicles that enable collective investment in companies that qualify for the EIS scheme.