Seed Enterprise Investment Scheme

I mean, In terms of business, the investment side of things is definitely enough to keep us going.

Schemes like the SEIS and the EIS schemes are really, really beneficial for us as a starting business.

It allows us to raise money with much less of a risk to the investors, and that will keep us in business for our early stages of our career.

Yeah.

And let me just explain to people what that is quickly.

So SEIS and EIS are tax incentives, which are basically to encourage people to put money into businesses with a view of, you know, being able to claim some tax against it.

So you see that as a good thing.

Yeah.

...

EIS and SEIS within the UK.

Um, these are great government-backed schemes, um, that stimulate private investors to back British businesses and support the wider economy.

Um, HMRC, in their infinite wisdom, they give investors into these, in, into these vehicles loads of fantastic tax reliefs to do so.

So two very good questions there that are two different questions.

Um, I believe that the UK's a fantastic place to start a business.

Um, the government for all, you know, f- for all their wisdom, they have implemented a structure of enabling startup capital to mobilize private businesses in the UK, and they've done it so, so well with the EIS, SEIS, the VCTC, all these different structures that we have, mobilized capital to get where they need to s- need to go.

The UK raises...

I'm Director General of the EIS Association.

Hopefully everyone listening is familiar with the EIS and SEIS.

But just in case you aren't, they are really important government schemes.

that encourage private investments into some of the most exciting and innovative startups and scale-ups we have in the UK.

We are the trade body, so what that means is we represent everyone involved in the EIS or SEIS, so that's entrepreneurs and people starting these businesses and raising investment, the advisors, so the lawyers and accountants and others who are working with these companies, and then, of course, the investors.

both the funds who are often investing in the space, but also the wealth managers and financial advisors who are also advising clients in this area too.

As the trade body, we do three main things.

One is education.

When funds lean into data-driven sourcing and screening, what do they gain and what do they lose? This is something I've had many conversations again.

Exactly to your point, if you're looking for outliers, data maybe doesn't always pick up those outliers, right? And equally, a bit of a cheeky question, I guess, what does your data suggest about SEIS and EIS investing and the kind of graduation to venture scale?

I'm a complete data nerd.

I was on a trading floor for seven years.

You know, I'm spending my time building relationships with the, you know, the pre-seed and seed investors in the UK.

Yeah.

And so talking about the kind of SEIS and EIS side of things...

How does that play into this whole game?

CIS and EIS, the Seed Enterprise Investment Scheme and the Enterprise Investment Scheme, were set up 32 years ago with the sole purpose of supporting small businesses, small to medium-sized enterprises in the UK by sharing the risk.

So they share the risk by HMRC giving you tax incentives to invest through EIS.

And that means that angel investors can get up to, they'll get a rebate of 50% of income tax paid, 30% income tax paid for SEIS and EIS.

But also once they've held those shares for three years, it means any gains are capital gains free.

The other side of this is if it all goes terribly wrong, the most that anyone can lose under EIS is 38 pence in the pound.

Now, as someone that owned Northern Rock shares that went completely kaput, that actually is not as much of a risk as you think.

So it's a very well thought out scheme and it's the envy of the world because it is the most progressive and the most proven scheme that we have.

And I think we've had over, I think it's £64 billion has been invested in UK businesses through SEIS and EIS.

And the investment which we are taking at present is about 1.5 million is at the start of it.

We've got the SEIS and EIS.

So it's somewhere around for that we are looking at about 950,000 because that's the mark, you know, where if somebody is within the EIS or SEIS would want to spend on it.

Just to

explain to our listeners, those two are incentives for angels to come in and get reimbursements on their investments, right?

Thank you for joining us this month for another Tax Efficient Investment special edition of IFA Talk.

We're going to be looking at sustainable, climate-friendly investing and the role also that SEIS can play in helping you to give investors access to some of the businesses developing solutions to the climate challenge.

Joining us to talk about this today is Dr. Nikki Dee.

co-founder at Carbon13.

Welcome to the podcast today.

Thank you again for joining us.

So SEIS can give investors access to some of the UK's most innovative early stage businesses, alongside some significant tax advantages.

But it can also feel like a bit of a lottery.