Call for Assistance: 02033 259 341
Spondoo Accounting
Call for Assistance: 02033 259 341
Spondoo Accounting

Is it possible for siblings to invest in your startup and qualify for SEIS or EIS relief?

October 25, 2023

When entrepreneurs embark on the journey of launching a startup, funding is a critical factor for success. In many cases, the initial capital comes from family and friends who believe in the business idea. However, not all investors are created equal, especially when it comes to tax incentives such as the Seed Enterprise Investment Scheme (SEIS) and the Enterprise Investment Scheme (EIS). In this article, we explore whether it’s possible for siblings to invest in a startup and take advantage of SEIS or EIS relief.

Understanding SEIS and EIS

Before delving into the specifics of sibling investments, it’s essential to grasp the basics of SEIS and EIS.

Seed Enterprise Investment Scheme (SEIS): SEIS is a UK government initiative designed to encourage investment in early-stage startups. Investors who back companies eligible for SEIS can benefit from significant tax advantages. This includes income tax relief, capital gains tax relief, and loss relief if the investment doesn’t perform well.

Enterprise Investment Scheme (EIS): EIS, like SEIS, offers tax incentives to investors. However, EIS applies to a broader range of companies and offers more substantial tax relief. Investors can receive income tax relief, capital gains tax deferral, and inheritance tax exemptions.

Investing in Startups: Who Qualifies for SEIS and EIS Relief?

Eligible Family Members:

  • Siblings (brothers and sisters)

Siblings, being close family members, often come to mind as potential investors for a startup. The good news is that siblings are indeed eligible to invest in your startup and qualify for SEIS or EIS relief, just like any other private individual.

  • Aunts and uncles – Your aunts and uncles can indeed invest in your start up and claim EIS & SEIS relief on their investment

Family Members Who Do Not Qualify for SEIS or EIS Relief:

While siblings can avail SEIS and EIS relief, it’s essential to clarify that not all family members are eligible. The following family members cannot claim these tax benefits:

  • Wife
  • Mother
  • Father
  • Grandmother
  • Grandfather

It’s important to note that these close family members can still invest in your startup, but they won’t enjoy the same tax advantages as siblings and other eligible investors.

In summary, siblings can invest in your startup and take advantage of SEIS and EIS relief, provided the business meets the scheme’s criteria. These tax incentives make investing in a startup more attractive and less risky for private individuals. However, it’s crucial to consult with tax professionals and seek advanced assurance to ensure compliance with the intricate regulations of SEIS and EIS. If you’re considering raising capital for your startup, remember that family and friends, including siblings, can play a crucial role in its success.

For support obtaining advanced assurance, structuring your cap table, and even start accounting & bookkeeping services, please get in touch with us today.

more tips

Can You Claim Food as a Business Expense?

The golden rule when claiming business expenses is that the cost must be “wholly and exclusively” for business purposes. So, where do you stand when it comes to food and drink? After all, everyone needs these things to survive. When does it become an allowable expense? Read on to find out when your business can claim food and drink as an expense.

Self-Employed National Insurance Class 2 and Class 4 Rates

If you are sixteen and over, self-employed (sole trader or in a partnership) and making a profit befitting the ‘small profits threshold’, you are liable to pay national insurance.

Key UK Personal Tax Year Dates & Deadlines 2021/2022

Are deadlines creeping up on you? Spondoo is here to ensure you keep on top of things and take control again. These are the important dates you should take note of.

How To Set Up A Limited Company 

A Step-by-Step Guide  This is an easy-to-understand, step-by-step guide, to opening a successful limited company. But before we dive in, let’s check the legality surrounding it. 

Accountants in Haslemere, Surrey

We are qualified accountants providing personal and professional services for start-ups, established companies and individuals in and around the Halsemere area in Surrey. With the rise in technology, we have embraced the digitisation of accounting using efficient digital accounting tools to offer reliable services to our customers. Our goal remains to get our clients the best accounting and taxation services at the most affordable rates.

Onsite Canteen and Lunch Vouchers - Are They Taxable?

The provision of food and drink to an employee by their employer is a lovely thing to do. Eventually, it promotes teamwork, loyalty, a sense of belonging and even improves productivity. Taking it at face value makes it look like a simple act of kindness. However, unless it is done correctly, it can cause tax and national insurance compliance issues for the employer.
1 2 3 40
Information provided on the site is merely guidance that may change in line with UK law and regulations. Users must not consider this to be financial advice or their sole resource when making any financial decision. Spondoo is a trading name for Accounting SQL Limited, authorised & license accounting firm under the Institute of Financial Accountants.
© Copyright 2023 - Spondoo - All Rights Reserved
How, can we help?
linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram