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Early Stage Business Prospects Boosted by Changes to Seed Enterprise Investment Scheme

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by Startacus Admin


Changes to Seed Enterprise Investment Scheme as new tax year begins promise to support 2000 new startup businesses across the UK.

1ba21a11-1f56-435c-848b-000f4338255d.The Enterprise Investment Scheme Association (EISA) is highlighting that the new terms of the Seed Enterprise Investment Scheme come into effect from today, 6th April, as the new tax year starts. These changes promise to support 2000 new startup businesses across the UK.

The Seed Enterprise Investment Scheme encourages private individuals to invest in early stage businesses, providing entrepreneurs with the vital funding they need to grow their businesses. The scheme is used by many of the UKs most exciting new startups and accounts for approximately £175million of investment each year.

The changes to the scheme cover four key areas:

  • An increase in the amount that a qualifying business is able to raise under the scheme increases from £150,000 to £250,000
  • The qualifying terms around the gross assets that a business is able to own still to be able to make use of the scheme increases from £200,000 to £350,000
  • The time limit after a business starts to trade to be eligible to use the scheme extends from 2 years to 3 years
  • An increase in the amount that any investor may make during a year increases from £100,000 to £200,000

It should be noted that under current and proposed legislation, if a company has already received EIS or VCT funding, it cannot receive any further SEIS investment, even if it is with the revised age and gross assets limits for SEIS.

luke-southern-9yCYGgPe5Kg-unsplash (Please also note, that whilst it is expected that these increases will be enacted and effective for share issues on or after 6th April 2023, HMRC will not be able to provide advance assurance or approve SEIS1 submissions for the increased limits until the Finance Bill is substantially enacted and receives Royal Assent. This usually takes place in July.

Director General of the EISA, Christiana Stewart-Lockhart commented, “These extensions, especially the age limit increase, are expected to particularly benefit female founders and those based outside of London and the South East. Evidence shows that these start ups often seek investment at a later stage and many were previously prevented from using the SEIS as they had passed the two year age limit. At a time when more women are starting businesses than ever before, this is a hugely important change to try and ensure they get the investment they so desperately need to grow their businesses.

It is one of the most important government programmes supporting entrepreneurs across the whole of the UK. The changes being implemented as the new tax year starts are set to boost the amount of investment available to young high growth businesses and enable their success. I’m delighted that the government has listened the requests from entrepreneurs to extend the scheme and these extensions illustrate their commitment to making the UK the best place in the world for start ups and innovation.”

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Published on: 6th April 2023

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