SEIS Versus EIS Explained: What Every Investable Entrepreneur Needs to Know
Entrepreneurs, innovators, and fearless startup founders like you are essential to the UK’s economic and technological future. The UK government knows that, and that’s why it offers a wide variety of Venture capital and Collective Investment incentives to encourage private investors to take the risk of investing in early-stage companies like yours.
According to figures released by the UK Business Angels Association, 90% of angel investors have invested through either SEIS or EIS, and 80% of the total investments in angel portfolios are SEIS or EIS.
The two most popular incentives are the Seed Enterprise Investment Scheme (SEIS) and Enterprise Investment Scheme (EIS). These schemes share many similarities in that they both grant investors considerable tax breaks for supporting early-stage founders, but they have some essential differences.
It’s crucial that every investable entrepreneur understands those differences, so you’ll know how to make your investment opportunity as enticing as possible from the first pitch meeting.
The key differences between SEIS and EIS
SEIS was established in 2012 and focuses on very early-stage startups. Private individuals can invest up to £100k per tax year and receive a 50% tax break up to the value invested in return. They’ll also be allowed a capital gains tax exemption on any profits they make if they sell their shares in the company after three years.
EIS was established in 1992 and focuses on medium-sized startups. Private individuals can invest up to £1m per tax year and receive a 30% tax break on the value invested in return. Like SEIS, they’ll also benefit from a capital gains tax exemption on any profits they make if they sell their shares in the company after three years.
Private investors in SEIS and EIS don’t have to pay inheritance tax on shares they’ve held for at least two years. Also, if they end up…