The Seed Enterprise Investment Scheme (SEIS): Your complete guide
You’ve just launched your company: you’re busy working on your product, trying to gain traction, seeking feedback from e...
Even with the ever growing number of investment options in Ireland, you might want to look further afield for funding.
One option is the UK, our closest neighbour. UK legals around funding rounds are very similar to Ireland so Irish startups can often meet the criteria for EIS and SEIS advance assurance from HMRC.
SEIS and EIS are some of the most investor-friendly incentives in Europe. The Schemes have been hugely popular since their introduction, helping startups raise over £25billion combined.
It’s our experience that many Irish startups don’t realise that they can arrange Advance Assurance and help their UK investors claim tax relief on their investment.
Your Irish startup could be eligible for the Seed Enterprise Investment Scheme if:
For larger rounds and companies trading for less than seven years, you’ll fall under the Enterprise Investment Scheme.
These schemes make investing in startups less risky for investors. SEIS provides income tax relief up to 50%. For the EIS, it’s 30%. Both schemes are eligible for loss relief if the company fails, inheritance tax exemption and capital gain tax exemption among other benefits. Providing of course, the business and the investment meet specific criteria.
If you were hoping to attract UK funding in 2022, it’s worth noting that two thirds of UK angel investors only invest in SEIS/EIS eligible companies. Getting your SEIS and EIS Advance Assurance won’t guarantee you get funding from UK investors – but it could certainly improve your chances.
Before promoting a round as SEIS/ EIS approved, you must apply to HMRC for Advance Assurance – this is the confirmation investors need that an investment in your business is eligible for SEIS or EIS.
To take advantage of the Schemes as an Irish business, you must have a physical presence in Northern Ireland or Great Britain – an office or other bricks-and-mortar trading location.
You can also qualify for SEIS/EIS if you have someone representing your company who’s based in NI or GB, who’s authorised to sign contracts.
It’s essential you’re registered at Companies House in the UK and you’ve applied for a UTR number from HMRC (this can take 6- 8 weeks to obtain).
If you think SEIS/EIS will be right for your company, it’s smart to get your application in well ahead of the tax year end – if your investors have SEIS/EIS allowance left over for this tax year, they’ll have the incentive to put their money into your company sooner because they can claim the relief on their tax return this year.
If you’re eligible for SEIS, individual investors can invest a maximum of £100,000 per year into your business. EIS eligible companies can accept funding from both individual investors, SEIS and EIS funds and corporate investors up to £1million per tax year. Corporate investors don’t qualify for tax relief but they have to receive shares on the same terms.
In this year’s State of European Tech report, Dublin is listed as the third most entrepreneurial location in Europe. Which makes it the perfect time for Irish startups to use their position within the ecosystem to attract more investment. The SeedLegals dedicated Irish team are standing by to help.