Here in this edition of the Get Funded! podcast we cover the essential requirements related to your company and its eligibility for SEIS / EIS funding.
As you might expect for such a generous tax relief, it is not available to all companies – instead it is targeted at small – medium sized companies with the capacity for growth (along with a healthy dose of risk!).
The key company requirements for SEIS / EIS are as follows:
- The company must be unquoted i.e. it must not be quoted on a recognised stock exchange. Note that the Alternative Investment Market (AIM) is okay for SEIS / EIS purposes as it is not counted by HMRC as a ‘recognised stock exchange’
- The company must have a UK permanent establishment. Most companies will be incorporated in the UK so this isn’t normally an issue but this demonstrates that the rules are more flexible than some might appreciate – it could be an overseas company with a UK branch / permanent establishment and still qualify
- For SEIS, the company must have gross assets of no more than £200,000 at the time of the issue of the shares – here we are concerned with total assets on the balance sheet only NOT net assets (ie after deducting liabilities). Where there are subsidiaries, these must be totalled up.
- For EIS, the gross assets limit is £15m immediately before and £16m after the use.
- For SEIS, the company must have fewer than 25 employees immediately before the relevant share issue
- For EIS, the employee limit is 249.
- The company must be carrying out a qualifying trade – the definition of what constitutes a ‘qualifying trade’ for SEIS / EIS purposes is deduced in reverse by reference to the ‘Excluded activities’ list – so if you’re not on it you should be okay! We’ll cover this in more detail in a future podcast as there are some potential traps here especially for software companies…
- For SEIS, the company must not have received EIS or VCT monies.