The Chancellor, George Osborne, has announced certain changes to the Seed Enterprise Investment Scheme (SEIS) and Enterprise Investment Scheme (EIS). The changes will be included in the Finance Bill 2015, and are aimed at ensuring that “the UK countries continue to offer significant and well-targeted support for investment into small and growing companies, in line with new EU rules”.
The Government will introduce the following changes to EIS and SEIS, subject to state aid approval:
- From 6 April 2015, the requirement that 70% of funds raised under SEIS must have been spent before EIS or Venture Capital Trust (VCT) funding can be raised will be abolished. In practice, this will be welcome to fast-growing companies seeking to combine SEIS and EIS/VCT investment, as it will become more straightforward to unify the two investment streams in a single funding round.
- When receiving its first EIS or VCT investment, a company must be less than 12 years old. There is an exception where the investment will lead to a substantial change in the company’s activity.
- A cap of £15 million on the total investment received by a company under SEIS, EIS and VCT will be introduced. This cap increases to £20 million for “knowledge-intensive” companies (i.e. companies that provide tailored services to corporate clients and rely heavily on professional knowledge).
- The employee limit for a knowledge-intensive company will be increased from the current limit of 249 employees to 499 employees.
- The 2015 Budget confirms the changes affecting entrepreneurs investing under EIS that we reported here.
- Companies that benefit substantially from subsidies for generating renewable energy will be excluded from benefiting from EIS, SEIS and VCT investment from 6 April 2015, except in the case of community energy generation undertaken by qualifying organisations, which will become eligible for Social Investment Tax Relief, subject to transitional measures.
Further details will be available in the next few months.
For further information on EIS and SEIS please contact Giao Pacey.