The Seed Enterprise Investment Scheme (SEIS), which offers tax reliefs to individual investors buying shares in small companies at a very early start up stage, has resulted in over £82m of funding for some 1,100 companies so far, according to government statistics, reports Harris & Co chartered accountants.
Its analysis shows that around £1.3m of SEIS funding is raised by 19 companies every week through the scheme, with the average amount of investment for a company put at £72,000.
SEIS allows companies to raise up to £150,000 of equity finance through the scheme in their lifetime, and is designed as an additional or alternative to bank lending, as well as providing potential access to ‘angel’ investors who can provide business experience.
Under the scheme, which was launched in 2012, investors can invest up to £100,000 a year in SEIS qualifying companies and will in turn receive 50% of their investment back as income tax relief. Investors using capital gains realised in 2013-14 and investing that gain in that same year or the following year will receive 50% capital gains tax relief on the amount invested when investing in an SEIS qualifying company.
Research commissioned by HMRC into entrepreneurs and investors’ knowledge and experience of the scheme showed that users and their agents felt the companies would not have been able to realise their achievements without SEIS, with some saying they would not have been able to raise the funding elsewhere.
Chancellor of the Exchequer, George Osborne, said SEIS, along with Start Up Loans and the Business Angel Co-Fund, was part of a government boost for entrepreneurs, saying: ‘I want the UK to be the best place in the world to start, finance and grow a business.’
The National Audit Office (NAO) published a report last month looking at the range of government initiatives designed to improve access to finance for SMEs. While BIS-led schemes such as the Enterprise Finance Guarantee and Start-Up Loans were said to be ‘generally performing positively in terms of meeting the largely activity-based success measures set for them’, the NAO said there was little evidence of a co-ordinated response across HMRC, the Treasury and BIS.
NAO head Amyas Morse said:
‘There is work to be done in terms of managing the schemes as a unified portfolio and articulating what they are intended to achieve as a whole. Given the importance to the government of promoting growth, greater benefits and public value could be achieved through treating the interventions as a programme, with a clearer focus on assessing what results can realistically be delivered.’