SEIS
SEIS is often a requirement for investors as they will receive upto 50% tax relief on their investment.
Key requirements:
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company may raise no more than £250,000 in total under SEIS (cumulative limit, not annual) .
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full time equivalent number of employees must be less than 25.
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immediately before the shares are issued, the total value of the company’s assets must not exceed £350,000.
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company must not have been trading more than two years before the shares are issued (so could have been incorporated more than 2 years if started to trade later).
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issuing company itself must carry on the new qualifying trade and any preparation work or R&D leading to it.
Shares issued do not qualify if:
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they’re not subscribed for wholly in cash upon issue .
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the investor disposes them before termination date – so needs hold 3 years .
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the shares carry any present/future preferential rights:
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to assets on winding up;
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to be redeemed;
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to cumulative dividends ;
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to dividends for which the amount and timing depend on a decision of the company or any other person.
Investors (or their associates) cannot:
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be employees prior to share issue, unless they are also a director.
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hold more than 30 per cent.
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have loans from the company which are linked to their share subscription.
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subscribe as part of a tax avoidance arrangement, must have genuine commercial reasons.
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subscribe for the shares as part of a wider arrangement which includes somebody else subscribing for shares in a company in which the investor – or anyone else party to the arrangement – has a substantial interest.