SEIS

GF005 Get Funded! SEIS – Make sure you have one of these!

Get funded!In this fifth episode of the Get Funded! podcast, we cover an essential – but frequently overlooked – step that you simply MUST get in place before you raise money under SEIS.

So essential, in fact, that without it, you could mess up the SEIS relief for your investors before you’ve even really got started!

We also cover the maximum amount that you can raise under SEIS being £150,000 and the importance of getting the order right if raising cash under EIS too i.e. SEIS then EIS and not the other way around.

There are changes afoot around the interaction of these reliefs and the “70%” rule but this merits a separate episode – coming soon….! (Subscribe below ;) )

GF004 – Get Funded! Podcast | SEIS | Get ready to slice the pie!

Get funded!In this 4th episode of the Get Funded! podcast we cover:

“Get ready to slice the pie!”

This show is all about the need to issue shares in return for a cash investment if it is to be eligible for SEIS or EIS under current rules.

We also cover what doesn’t qualify e.g. loans, and some tips around types of shares and nominal values of shares to help you get the SEIS share capital structure right from the outset.

Please subscribe and leave us a rating on iTunes – this will help this podcast get found by more entrepreneurs and help the UK get ahead in raising funding for exciting new startups!

GF003 – Get Funded! podcast – What are the key tax benefits of SEIS?

Get funded!In this 3rd episode of the Get Funded! podcast we explore the key tax benefits of the Seed Enterprise Investment Scheme (SEIS) including:

  • 50% income tax relief
  • potential for 14% capital gains tax shelter
  • IHT exemption after 2 years
  • CGT free sale after 3 years
  • Sideways income tax relief should the startup fail

All in all this can amount to up to 86.5% tax shelter for the investor so only 13.5% capital may be at risk.

GF002 – Why should SEIS matter to my startup?

Get funded!In Episode 2 of the Get Funded! podcast we cover:

  • why and how SEIS is becoming so popular?
  • why many business angels and seasoned investors will expect you to have considered SEIS?
  • an outline of the tax benefits that SEIS provides for investors
  • why you might be at a disadvantage pitching for investment without SEIS?

Leave us any comments or questions in the comments section.

GF001 Get Funded! – What is SEIS?

Get funded!We are thrilled to announce the launch of a new podcast: “Get Funded!”

A podcast that aims to share practical information and tips on the workings of the Seed Enterprise Investment Scheme (SEIS) and the Enterprise Investment Scheme (EIS) with entrepreneurs, CEOs and founders.

I am afraid that there is little in terms of bells and whistles in terms of the podcast production at this stage (maybe that’ll come later ;) ), as we are more concerned with getting the information and tips out there as quickly as possible and exploring whether this might be a more digestable medium than text….

Let us know your comments and thoughts.

In this first “Get Funded!” podcast we cover:

  • what is SEIS?
  • who benefits from SEIS?
  • which companies is SEIS aimed at?
  • why is SEIS necessary?

This first podcast is really just an initial primer – we will aim to keep them as short and as easy to digest as possible.

What will the 7 May election mean for UK tech companies?

As we run up to the 7 May 2015 election, thoughts turn to what the result might mean for UK startup and fast growth companies?

Techcrunch has noted the partisan approach that UK tech companies seem to be taking in writing a letter in support of the Conservative Party and points out that this stance should be taken with a pinch of salt (although I understand the article was penned by a declared Labour supporter ;) ).

I don’t want this to fall into a political rant but I sense there is a lack of transparency in the Labour party’s stance on how it might build on the successes that we have already seen in terms of tax policy for UK tech and fast growth companies.

For example, the Conservatives have made great strides in the following areas:

  • The introduction of Seed Enterprise Investment Scheme (SEIS) and its generous tax incentives to support investment into early stage companies to supplement the Enterprise Investment Scheme (EIS) aimed at more established companies
  • The improvements made to the Enterprise Management Incentive (EMI) share option scheme to allow participants to benefit from Entrepreneur’s Relief despite potentially not holding the shares for 12 months nor even holding more than 5% of the share capital
  • Improvements to the R&D tax credit incentive scheme that now boasts a 33.3% return for claimant SME companies
  • Introduction of the Patent Box at its beneficial 10% corporation tax rate – despite challenges from across the EU
  • Enhancements to Entrepreneur’s Relief that now allows entrepreneurs to benefit from a 10% CGT rate on the first £10m of lifetime gains
  • Reduction in the main corporation tax rate down to 20%
  • Plus video games tax relief and other reliefs for creative and digital companies

Taken together these measures keep the UK on track to meet George Osborne’s pledge to make it the most attractive place to do business in the G20.

It is worth noting that many of the above tax incentives were first introduced during Labour’s last bout in office; albeit in a more watered down form in most cases – although who’s to say that Labour might not have followed a similar path had they stayed in the office…? Truth is, we don’t know.

And herein lies the problem…

Labour do not appear to have shared much detail on their thinking and policies around these areas and, in particular, these specific tax incentives. The danger is that an incoming party wants to “shake things up” and “make their mark” which may threaten the stability and progress made around these important areas for UK entrepreneurs.

We may just be about to find out more…

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5 essential tax tips for entrepreneurial tech companies – webinar

thingsDescription: In this 45 minute webinar, Steve Livingston, founder of innovation tax specialists – ip tax solutions, walks entrepreneurs / founders of UK technology and digital companies through 5 vital tax planning opportunities that are often overlooked – potentially losing out on £100,000’s of cash tax savings!

These 5 essential tax tips are based on UK Government tax incentives that have been enacted to help and support tech and digital companies just like yours…

This free webinar aims to provide participants with an awareness to be able to move forward in exploring these cash saving (and potentially raising) opportunities within your business.

You should ideally be the founder, CEO, CFO of a UK based technology, digital or creative company to get the most out of it.

Date & Time: Thu, May 7th, 2015 at 1:00 pm BST

Registration

Please register for the above meeting by visiting this link: http://iptaxsolutions.enterthemeeting.com/m/FQZFF9B3

Once you have registered, we will send you the information you need to join the webinar.

Get email updates (they’re free!).



Share Equity: Once it’s gone, it’s gone

Equity Sometimes there is little alternative but to issue shares to investors, employees and other stakeholders. If the company’s an early stage company then it has little else to ‘sweat’ to release some cash.

You might be able to benefit from the Seed Enterprise Investment Scheme (SEIS) or the Enterprise Investment Scheme (EIS) but – although technically related to your company – it is the investor that pockets the tax relief (not you). You might be able to squeeze some more cash out of the investors by virtue of the tax relief they will receive but (as the rules currently stand) you have to issue shares to them in return for their investment.

Whilst money for salaries is tight, employees may benefit from an approved share option scheme like the Enterprise Management Incentive Scheme (EMI). Although they only hold a piece of paper entitling them to the shares at some point in the future (say on an exit), you must still take into account the post dilution shareholdings once their shares are issued.

So you started with 100% of the company and very quickly you might find that your shareholding is down to not much over 50%. And then there’s that big VC round you’re contemplating in a year or so – further dilution to come…..

There is only ever 100% to divide up. For each 1% that goes it has gone (probably) for ever. Often it is a price worth paying as the old saying goes,

“its better to have 40% of a successful large pie than 100% of a failing tiddler”

But at every stage you should try to ensure that you have explored incentives that do not require you to part with your equity in your company. 

So you could look at R&D tax credits and grants. Also, further down the line the Patent Box could shave some much needed cash off your corporation tax bill.  These Government tax incentives and grants do not require you to give up any of your shares in return for the cash and so could allow you to get further down the line to achieving your milestones with no further decrease in your shareholding.

Often in practice, companies have little alternative but to push through with investment for shares in the company but its always useful to remember that there are other (non-equity) funding avenues available.

Image: Creative Commons License Richard Potts via Compfight