On 27 May 2021 the UK government published statistics for the Enterprise Investment Scheme (EIS), the Seed Enterprise Investment Scheme (SEIS) and Social Investment Tax Relief (SITR). The latest statistics set out the amount of funds raised by companies using these tax advantaged incentive schemes in the tax year 2019/20.
Enterprise Investment Scheme (EIS)
The EIS provides investors with an incentive to invest in the shares of small, unquoted companies. Tax relief is available to the investor based on a percentage of the amount invested. Relief from capital gains tax may also be available.
In the year 2019/2020, 4,215 companies participated in the EIS scheme and raised a total of GBP 1,905 million. In that year there were 1,500 companies raising funds under the EIS scheme for the first time, and they raised a total of GBP 466 million in investment. Of the total funds raised under the EIS in 2019/20, GBP 630 million representing 33% of the total was recorded as raised by companies in the information and communication sector. Companies with a registered office in London or the south east raised 66% of all EIS investment in the year.
Seed Enterprise Investment Scheme (SEIS)
The SEIS was launched in 2012 to help early stage companies raise seed capital, as enterprises at an early stage of their business operations have difficulty in raising investments owing to the perceived investment risks. Investors under the SEIS can obtain 50% income tax relief based on the amount of their investment. Capital gains tax relief is also available.
In the year 2019/2020, 2,090 companies participated in the SEIS scheme raising a total of GBP 170 million. Of the participating companies in 2019/20, 1,620 were raising funds under the SEIS scheme for the first time, raising a total of GBP 145 million in investment. Companies operating in the information and communication sector accounted for 37% of SEIS investment in the year. Companies with a registered office in London or the south east raised 63% of SEIS investment in the year.
Social Investment Tax Relief (SITR)
SITR can be used by certain social enterprises to raise funds to support their trading activity. Funds can be raised under the scheme by a community interest company, community benefit society or charity. Investors may obtain tax relief on shares purchased or funds lent to these types of social enterprise. In the year 2019/2020, 30 social enterprises received investment through the SITR scheme, and GBP 3.3 million was raised.