SEIS AND EIS: AN OBU GUIDE

Two great government initiatives that could save you up to 50% tax*.

*Subject to chosen scheme, and to investors and businesses being eligible.

What are SEIS and EIS?

SEIS and EIS are two initiatives set up by the UK government to encourage investment in early-stage and growing businesses, by offering generous tax incentives to the angels who invest in them.

SEIS stands for Seed Enterprise Investment Scheme, and focuses on businesses under three years old. EIS stands for Enterprise Investment Scheme and focuses on slightly older businesses, up to seven years old.

EIS was established in 1994 and SEIS in 2012. In that time, they’ve helped over 53,000 growing businesses raise almost £30 billion of investment here in the UK.

“We make sure every business on Obu qualifies for SEIS or EIS as part of our own due diligence process – so you know every investment opportunity you see comes with big tax incentives.”

Sarah King, founder & CEO Obu

The Obu position

Here at Obu, we’re big believers in both SEIS and EIS because of the incredible benefits they bring to start-ups, scaling businesses and the angel investors who back them. 

They’re fuelling investment in young, innovative businesses here in the UK. And, at the same time, they’re opening up angel investing to more people, with generous tax breaks and loss relief that can make it feel more accessible and affordable.

In fact, we’re so passionate about the initiatives’ positive impacts that we successfully campaigned to extend the eligibility period for SEIS so more businesses could benefit.

Our #overbeingunderfunded campaign pushed the government to extend the age limit from two to three years – something we know will empower more women to take part.

The key facts

Here’s how SEIS works on a 10k investment.

SEIS in action

*You’re eligible for loss relief on your net investment at the same rate as the highest income tax rate you pay.

So if your income takes you into the 45% tax bracket, you’ll qualify for 45% relief on any losses.

EIS in action

Here’s how EIS works on a 10k investment.

*You’re eligible for loss relief on your net investment at the same rate as the highest income tax rate you pay.

So if your income takes you into the 45% tax bracket, you’ll qualify for 45% relief on any losses.

“Whether you’re thinking of making an investment, or raising investment for your business, SEIS and EIS are absolutely game-changing.”

Sarah King, founder & CEO Obu

The big questions

  • Yes! Every business you see on Obu is eligible for SEIS or EIS.

  • We’ve created SEIS and EIS icons so you can see at a glance which scheme the businesses on Obu are eligible for. You’ll see them on the founder pages of our website.

    As part of our due diligence process, we ask every business that wants to raise with us to prove they’re eligible for SEIS or EIS by showing us confirmation of their advance assurance from HMRC.

  • If you’re a founder looking to raise investment, the tax incentives offered by SEIS and EIS mean they can be a really effective way to attract potential investors. If you think your business meets the criteria we’ve shown in the key facts table above, you can go to gov.uk to apply to use SEIS or EIS.

  • No. The schemes were set up by the UK government to help UK businesses grow, so they’re only open to businesses based here.

  • Yes. The big one is, to benefit from the tax breaks, you need to be a UK income tax payer. You’ll also need to pay for your shares up front, and keep them for three years.

    There are a few more rules which you might need to consider if you’re already involved with the business you’re investing in. You can’t be an employee of the business, but you can be a paid director. You also can’t have a substantial interest in the business (more than a 30% shareholding), any linked loans or any related investments. You can find more details on these points over on Gov.uk.

  • Advance assurance is a confirmation from HMRC that a business meets the criteria for SEIS or EIS. It means any investment into that business will be eligible for tax relief, as long as the investor hasn’t already used all of their SEIS or EIS tax benefits for that year.

    Businesses don’t legally have to get advance assurance before starting their raise, but it’s a very useful way of attracting and reassuring potential investors. That’s why we ask everyone who wants to raise with Obu’s support to have it in place, and show us confirmation.

    You can find out more about advance assurance, and how to apply, over on gov.uk

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