Differences In SEIS And EIS Shares

SEIS and EIS are both investment schemes launched by the UK government in the goodwill and act of pushing small and budding enterprises in the country. Starting a business involves multiple risk factors and not everyone no matter how interested is willing to embrace such risks. Understanding this dilemma, the country has focused on bringing out many different schemes and tax relaxation benefits among which SEIS is Speed Enterprise Investment Scheme, and EIS, Enterprise Investment Scheme is most utilised programmes. Even though both are different, they are interconnected in terms of their intentions, motivations, benefits, and purpose.

In this article, we will be highlighting certain crucial differences between both plans to help entrepreneurs choose the most suitable one as per their requirements:-

What Are SEIS And EIS?

Both programmes are designed to help budding small enterprises in tax relaxation. No, they do not offer capital support. Instead, they are schemes well-designed for entrepreneurs to made their shares available tax-free. The act will encourage them to attract more investors and successfully start their business.

SEIS: Speed Enterprise Investment Scheme focuses on businesses that are on their initial or starting period. Companies with employees less than 25 generally belong to this category. Also, there is a certain limitation in terms of receiving investments per year. SEIS can receive up to £150,000 and no more. Only individual investors (no company) can invest in SEIS per tax year.

Enterprise Investment Scheme Shares: EIS offers broad scope in comparison to SEIS. This means, companies running with 250 employees and/or 7 years of trading history can participate. Both individuals, as well as company investors, can invest up to £1 million/ tax year. Per year, EIS business can accumulate £5 million/ tax year. However, the total funding amount should not exceed £12 million. Also, companies investing in EIS shares will not gain any tax relief, unlike individual investors.

Major Differences Between SEIS And EIS

Below are listed certain key differences between SEIS and EIS shares scheme.

• In Terms Of Fund Raised: While SEIS can raise a maximum of £150,000, EIS is limited to generating a £12 million total.

• Company Size: SEIS applies for a company in its initial stage, having a staff of 25 employees or less while EIS can be for slightly old companies with 250 people working in its team.

• In Terms Of Investment: Only individual investors are allowed to invest in SEIS, in EIS both individuals and corporations can invest. However, corporations investing will not secure any sort of tax relief.

• Country: Both SEIS and EIS are valid in the UK.

• Trading Age: SEIS should have a trading age of up to 2 years while EIS should have a trading age of 7 years.

• Starting Tax Relief: Initially, SEIS can gain 50 per cent relief in tax while EIS can secure 30 per cent.

Conclusion

Both schemes are profitable for small businesses to accumulate and attract investment. At the same time, both have crucial differences as discussed above. Do make a suitable choice.