The Chancellor, Kwasi Kwarteng, today (23 September 2022) announced a set of sweeping changes to SEIS and strongly hinted at pushing out the EIS sunset clause, which currently means the EIS scheme is withdrawn from 6 April 2025 if no action is taken.
The changes, which are copy and paste from the The Growth Plan, are as follows:
First, let's look at the changes regarding SEIS - very firm commitments have been announced:
From April 2023, companies will be able to raise up to £250,000 of SEIS investment, a two-thirds increase. To enable more companies to use SEIS, the gross asset limit will be increased to £350,000 and the age limit from 2 to 3 years. To support these increases, the annual investor limit will be doubled to £200,000. These changes will help over 2,000 companies a year that use the scheme to grow.
The news on EIS remains less firm, but seems positive and surely indicates that EIS won’t be allowed to lapse:
The government remains supportive of the Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCT) and sees the value of extending them in the future.
A few obvious questions spring to mind as a result of these changes:
- What happens if you've raised £150k SEIS and £50k EIS. The current rules preclude raising SEIS after you've raised EIS funds - so will those businesses be excluded from benefiting from the new £100k increased SEIS allowance?
- How will a company that has been trading for 2 years at, say, 1st Jan 2023 be treated - will they be able to make use of SEIS from April 23? This would strongly disincentivise companies from raising EIS in Q1 2023 if they are between 2 and 3 years trading.
This article will be updated as more details on the changes are published.
At FounderCatalyst, we help founders make their UK startups investor-ready, close funding rounds, and motivate their teams. We handle SEIS and EIS advance assurance, fundraising legal paperwork, data rooms, cap table management, and set up EMI and unapproved share option schemes. Book a call with an expert to learn more.
