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How to use Instant Investment to raise money before the end of the tax year

Mar 13, 2020
Updated: Mar 01, 2023
Vasu Sarin SeedLegals
Vasu Sarin

Head of business development

Suzanne Worthington
Suzanne Worthington

Senior Writer

Do your prospective investors suddenly seem in a hurry to invest in January, February or March? Maybe you’ve noticed an increased appetite from investors to sign the paperwork with your company before the end of the tax year (5 April).

The deadline of the tax year end creates one of the investment hot-spots in the calendar year. This is because many investors are keen to close deals to get their S/EIS tax relief for the current tax year.

Whether or not you’ve seen an increase in investor appetite, in this post we explain the benefits of investing before the end of the tax year, and how to help investors make the most of their SEIS or EIS tax relief by using Instant Investment.

The S/EIS rules make 5 April an investment deadline

The government created the Enterprise Investment Schemes – SEIS and EIS – to incentivise investment to UK early stage companies. The two schemes are similar, but have some important differences:

  • SEIS is focused on very early stage companies. The scheme allows an individual to invest up to £200,000 per tax year in exchange for 50% Income Tax relief.
  • EIS focuses on medium-sized startups. This scheme allows an individual to invest up to £1 million per tax year in exchange for 30% Income Tax relief.

The SEIS and EIS tax relief allowance (£200,000 for SEIS and £1M for EIS) can be claimed for the same tax year as the investment is made, or for the preceding tax year – this is known as carry-back.

For example; if an investor makes an investment of £50,000 which qualifies for SEIS in this tax year (2023-24), they can claim Income Tax relief for this tax year or they can carry back to the previous tax year (2022-23).

Does your investor want to offset their investment against their Income Tax for the 2022-23 tax year? If so, they’ll need to hurry because they have only until 5 April 2024 to make that investment.

Use Instant Investment to top up a round

At SeedLegals, we make it simple for companies to take an investment quickly anytime – we call this agile fundraising.

As we approach the end of the financial year, SeedLegals Instant Investment agreements are a popular way to take a one-off investment without the stress, expense and time-consuming process of doing a traditional funding round.

Could you use Instant Investment to take an investment now? Here are some questions to consider:

  • Have you recently closed a round but still have investors who want to invest? Could their background/connections/ involvement be beneficial to you now rather than waiting to onboard them in a later round?
  • Could your company benefit from a cash injection now to accelerate growth, but you don’t have time to go through a traditional funding round?
  • Did you close a funding round early because some investors took longer than you expected to decide, but now they’re ready to invest?

If you answer ‘yes’ to any of these, you might be able to accept more investment via an Instant Investment now, rather than waiting to do another funding round.

Agile fundraising

Raise before or after a round

Sometimes, you can’t afford to wait. Our SeedFAST, SeedNOTE and Instant Investment agreements allow you to sign up investors outside of a funding round. Ready to sign in minutes.

How it works
Instant Investment

Talk to an expert

Got questions about taking investment? Not sure what funding strategy is best for your company? Our team is on hand to help every step of the way. Book a free call with one of our experts to get answers fast:

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