The schemes known as the Enterprise Investment Scheme (EIS) and the Seed Enterprise Investment Scheme (SEIS) are two of the tax advantaged venture capital schemes in the UK, the other being the tax relief for investment in venture capital trusts for which statistics are published separately. As there is a strong demand for data on these schemes the UK government is now compiling statistics on the use of the schemes at quarterly intervals.
The latest statistics issued by the UK government on 27 October 2016 set out the amount of funds raised by companies using the tax advantaged incentive schemes EIS and SEIS in the tax year 2014/15. The statistics are gathered from the company compliance statements EIS1 and SEIS1. Figures for the schemes remain provisional for some time because companies are given several years in which to submit the forms. However the majority of companies submit their forms within the first three years.
Statistics for EIS
The EIS was introduced by the UK government to provide investors with an incentive to make investments in the shares of small, unquoted companies. The investor is granted tax relief based on a percentage of the amount invested and in some situations there is also some relief from capital gains tax.
The data for 2014/15 shows that a total of 3,265 companies raised funds totaling GBP 1,816 million under the EIS. Of these, 1,660 companies were raising funds for the first time under the scheme and those companies raised a total of GBP 1,022 million.
The largest proportion of investment was raised in London and the South East with companies in the region raising 65% of the total investment received under the EIS in 2014/15. Also worth noting is that companies in the business services sector raised more than GBP 600 million of the investment received in 2014/15, more than one third of the total investment received.
Since the EIS was launched in 1993/94 around 24,620 companies have raised investments through the scheme and a total of more than GBP 142 billion has been raised.
The number of investors claiming income tax relief under the EIS on their self assessment tax returns in 2014/15 was 29,380. Most of these were investing relatively small amounts in the companies qualifying for the EIS, with more than 80% of the investors making a claim for tax relief in relation to an investment of less than GBP 50,000.
Statistics for SEIS
The SEIS was launched in 2012 to help very early stage companies raise seed capital. Small companies at an early stage of their business activities find it more difficult to raise investments because of the perceived risks for investors. The SEIS offers income tax relief to investors of 50% of the amount of their investment, together with some capital gains tax relief.
In 2014/15 a total of 2,290 companies raised investment under the SEIS and they raised GBP 175 million of funds. Of these companies more than 1,800 were raising funds under SEIS for the first time and those companies represented GBP 152 million of the total investment received. Of the companies receiving SEIS investment in 2014/15 more than 62% were in the high tech and business services sectors.