The Seed Enterprise Investment Scheme is a must-use fundraising tool for any UK-based companies. If your company gets SEIS status, the UK government gives your investors 50% of their investment back as a tax cut and gives them over 70% downside protection.
Style Counsel got SEIS approval last week, and we’ve already seen what a huge difference it makes – quite simply, investors are willing to invest more.
In this post, I have given a quick explanation of what SEIS status does and how companies can get it. Accountants will offer to do the application for about £1,500, but as a start-up, you should not be paying these fees for something you can do yourself with a bit of elbow grease and research.
Why investors and start-ups love SEIS:
The above example shows that if someone invests £50,000 in a company with SEIS approval, only £13,750, i.e. 27% of capital invested, is at risk.
Here are some other important points to note:
How to get SEIS status:
Accountants will offer to do the application for you for about £1,500, since this will likely equate to 1% of the money you raise, you really should do it yourself. It isn’t fun, but it’s not rocket science.
As a company, you need to apply to advance assurance from HMRC. Once your application is approved, you will get a letter saying you have been granted advance assurance. You can then take it to investors, telling them that their investment qualifies for SEIS relief.
The form is only annoying to fill in because some of the questions are unclear if you have never answered them before. I spent some time researching and calling the HMRC and have listed my tips below.
It will take 6 – 8 weeks from when you submit the application to get your advance assurance approved. I recommend calling the SEIS team after you submit your documents to make sure that they have received them and to find out what your place in the queue is.
As you can see, your company and your investors can get great benefits with Seed Enterprise Investment Scheme relief and getting it is not difficult. Now go fund yourself! :)