investment boost for growth companies

The two schemes provide tax relief to encourage individuals to invest in small companies during the initial, high-risk stage and the changes were announced in the September 2022 Budget and are aimed at encouraging investment in high-growth SMEs, to boost the UK economy and create jobs.

For SEIS fundraising, companies can now raise £250,000, up from £150,000, and the raise can now take place within the first three years of trading, up from two years.  The amount held in gross assets has also been increased, where companies previously had to have no more than £200,000 in gross assets to be able to raise SEIS, this has now increased to £350,000.

Full details about SEIS can be found here.

The EIS is designed for later stage companies and was due to end in 2025, but the government has confirmed that it will continue beyond that date.  EIS can be used where a company as no more than £15 million in gross assets, fewer than 250 employees and no more than seven years since its first commercial sale.

In addition, the government has introduced a new knowledge-intensive EIS investment, with extended allowances, for companies involved in research and development activities or with a significant intellectual property component.

More information about EIS can be found here.

Overall, the changes to SEIS and EIS are expected to provide significant opportunities for growing businesses to attract investment and expand. The tax relief schemes are already popular with investors, and the new rules are likely to increase interest in high-growth SMEs.

Growing businesses have the potential to raise more investment through these schemes, enabling them to expand more quickly and create more jobs, although businesses must meet the qualifying criteria for SEIS and EIS investments, and investors will be looking for companies with a strong track record and promising growth prospects.