HMRC have released statistics showing an increase in the number and amount of investments made under the Seed Enterprise Investment Scheme (SEIS). The statistics also show decreases in Enterprise Investment Scheme (EIS) and Venture Capital Trust (VCT) scheme investments.
These schemes provide businesses with financing, while giving investors tax incentives through Income Tax and Capital Gains Tax (CGT) reliefs.
Statistics released by HMRC include the first estimates of funds raised in the 2023-24 tax year and information about Advance Assurance Requests (AAR) for 2024-25.
Enterprise Investment Scheme (EIS)
- In 2023-24, 3,780 companies raised £1.575 million through EIS.
- EIS saw investment reduce by 20% in 2022-23. This continues the trend of recent years following high levels of investment in 2021-22.
- The reduction is likely due to the higher interest rates seen in recent years.
- The increase in amounts investable under the SEIS scheme may also mean that companies have raised funds through that scheme rather than through EIS.
- The amount of funds raised through EIS has now dropped below pre-pandemic levels.
- 1,010 companies that had not previously used EIS, raised £309 million (some 20% of all EIS investment). This is a decrease from 2022-23, both for the number of new companies applying and the amounts raised. A more stringent risk-to-capital condition, as well as the increase in the limits of the SEIS scheme, are likely responsible.
- For 2024-25, 3,090 Advance Assurance Requests (AAR) for EIS applications were received by HMRC, 60 fewer than 2023-24. They had approved 2,355 (76%) by the time the statistics were published.
- 35,150 investors claimed Income Tax relief under EIS in 2023-24. This is down from the 40,470 investors who claimed in 2022-23.
Seed Enterprise Investment Scheme (SEIS)
- In 2023-24, 2,290 companies raised £242 million.
- This is a significant increase (51%) in the amount raised in 2022-23, which is due to the scheme expanding in April 2023. The new changes meant more companies were able to qualify, and the amount of investment they could raise also increased.
- 1,535 companies were using the scheme for the first time and raised £181 million between them.
- This was a 5% increase on 2022-23 in the number of new companies claiming, but a 29% increase in the amount raised. This reflected the increase of the investment limit to £250,000.
- 41% (£99 million) of the amount of SEIS investment received related to companies from the information and communication sector.
- 10,145 investors claimed Income Tax relief under SEIS in 2023-24. This is a 23% increase on the previous year.
- Following the April 2023 adjustments, investors can now claim the relief on investments up to £200,000 (previously £100,000). Around 3% of investors invested over £100,000 in 2023-24. However, the amount this proportion collectively claimed amounted to around 22% of all investment on which the relief was claimed.
- HMRC received 3,195 AAR for SEIS applications for 2024-25, with 2,705 (85%) being approved by the time the statistics had been published.
- This is an increase on the 2,745 applications received in 2023.
Social Investment Tax Relief (SITR)
- The SITR scheme closed in April 2023.
Venture Capital Trusts (VCTs)
- In 2023-24, VCTs raised £873 million. This is a decrease of 17% from 2022-23 and follows trends in the wider venture capital industry.
- The amounts raised still make 2023-24 the third-highest year on record.
- The number of VCTs raising funds remained at 45 for 2023-24.
- The number of investors decreased by 9% to 24,085 in 2023-24. The amount of VCT investment on which Income Tax relief was claimed also decreased by 19%.
- The reductions are in line with the decrease in funds raised by VCTs.
- The average amount invested by an individual was around £34,000.
Useful guides on this topic
EIS: Enterprise Investment Scheme (Subscriber guide)
When can EIS relief be claimed? What are the conditions for EIS relief? What are the benefits of EIS relief?
SEIS: Seed Enterprise Investment Scheme (subscribers)
When can SEIS relief be claimed? What are the conditions for SEIS relief? What are the benefits of SEIS relief?
Social Investment Tax Relief (SITR)
What is SITR? What are the qualifying conditions for SITR? What relief is available? How is it different to Community Investment Tax Relief (CITR)?
Venture Capital Trusts (VCTs)
A Venture Capital Trust (VCT) is a company approved by HMRC that invests in or lends money to unlisted companies. Individuals may invest in a VCT, spreading investment risk, as opposed to making a direct investment in an unlisted company.
EIS or SEIS: Advance assurance from HMRC
HMRC offers an advance assurance application service for both the Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS). How do I apply? What information is needed?
Risk-to-capital: EIS, SEIS and VCTs
What is the risk to capital condition for SEIS, EIS or VCT companies? What steps can you take to meet it? Examples of risk to capital.
Knowledge-Intensive Companies
What are the conditions for investing in EIS Knowledge-Intensive Companies (KICs), what qualifies and how can it benefit investors?
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