The UK Government's recent mini-budget announced changes to the current Seed Enterprise Investment Scheme (SEIS).
SEIS was created in 2012 to encourage individual ‘angel’ investors to invest in small and medium businesses in return for tax incentives. The scheme is beneficial to start-up companies as a method of obtaining much-needed finance that may not be available via traditional methods.
The proposed revisions to the scheme are due to come into force in April 2023 and will see the amount of investment that can be raised through the SEIS increased to £250,000 from £150,000.
The Government also intends to widen the scheme’s eligibility criteria by:
• increasing the current age restriction of the company from two (2) years to three (3) years; and
• increasing the amount of gross assets that a company can have under the scheme from the current £200,000 to £350,000.
The changes will also increase the annual limit that an individual investor can invest from £100,000 to £200,000.
While the changes do not come into effect until April 2023, companies can begin to plan their investments based on the new limits provided that the shares are not issued until the new rules have come into force. The changes to the eligibility criteria may also allow companies who have reached the current investment limit to take advantage of the increased limit provided they meet the qualification criteria once the new rules are introduced.
The Government also mentioned in the mini-budget that they remain supportive of the Enterprise Investment Scheme and indicated that it could be extended beyond its current April 2025 deadline; however further details have not yet been provided.