EIS and SEIS funds for pre-Budget allotment

“We’ll have to increase taxes” at the October Budget, Chancellor Rachel Reeves has warned. 

Higher earners will likely have to bear the brunt – and more people will now be caught. The number of top-rate taxpayers has more than doubled in the past three years, whilst the number of higher-rate taxpayers is expected to rise to 6.3 million this tax year – up from 4.4 million just three years ago.

If you are concerned, where could you turn? How could you make the most of the current tax-saving allowances whilst they’re still around? 

EIS and SEIS could provide valuable tax relief. Here we give a quick overview of the available reliefs and of four funds which are targeting a pre-Budget allotment, to help experienced investors “lock in” the tax relief at the current level. 

Tax rules can change and benefits depend on circumstances. This is a brief outline based on current rules: there are detailed conditions and rules you should consider carefully before investing. You should invest based on investment merit, not the tax benefits alone. 

EIS and SEIS – up to 50% income tax and capital gains tax relief

If you’re an experienced investor comfortable with investment risk, once you’ve maximised your pension and ISA contributions you could consider investing in British startups via the government-backed Venture Capital Schemes.

In return for taking the risk of backing ambitious young businesses, the Enterprise Investment Scheme (EIS), and the Seed Enterprise Investment Scheme (SEIS) could let you claim back some of the amount you invest from your tax bill. You could even claim back tax you’ve already paid. What’s more, if your investment increases in value, the growth could be free of CGT.

SEIS funds focus on even smaller, younger companies than EIS and offer more generous tax reliefs to reflect the additional risk. For both schemes, you must hold the investment for at least three years to retain tax relief – you should expect to hold the investment considerably longer.

EIS tax relief

• Up to 30% income tax relief – in same tax year, or 'carry back’ to reduce previous year’s tax bill 
• Capital gains tax deferral on gains made elsewhere
• Loss relief
• Inheritance tax relief (when held at least two years and upon death)

You can invest up to £2 million per tax year (if including knowledge-intensive EIS). 

SEIS tax relief

• Up to 50% income tax relief – in same tax year, or 'carry back’ to reduce previous year’s tax bill 
• Up to 50% capital gains reinvestment relief on gains made elsewhere 
• Loss relief
• Inheritance tax relief (when held at least two years and upon death)

You can invest up to £200k per tax year. You must hold the investment for at least three years to retain tax relief – you should expect to hold the investment considerably longer

Listed below are SEIS and EIS funds expected to allot shares before the Budget (30 October 2024). The investments marked with a golden “W” are our featured offers, the ones we believe have particular merit – see our criteria. 

Timings are not guaranteed and offers are subject to capacity. Cleared funds and completed applications must be received by the deadlines quoted below – you can apply online and pay by bank transfer. 

The fund, one of our Featured SEIS offers, is managed by SFC Capital, one of the most active seed investors in Europe. It has backed nearly 500 companies to date and started to return capital to investors. It has so far achieved 13 full or partial exits (including marketing platform Cognism, 39.9x return) and returned £3.8 million to investors from investments costing £0.87 million. Past performance is not a guide to the future; there have also been failures.

• Target return: 3x after 5-8 years (not guaranteed)
• Tax relief available in: 2024/25 tax year (or carry back to 2023/24)
• Minimum investment: £10,000
• Next deadline: 16 August for targeted deployment by 4 October – not guaranteed

Startup Funding Club SEIS Fund Performance per £100 invested in each tax year

Jenson SEIS Fund – deadline 30 Aug

The fund was launched in 2012, the same year SEIS was introduced. Manager Jenson Funding Partners (“JFP”) is an established early-stage investor. It follows a broadly generalist strategy, seeking tech-enabled businesses with a defensible offering. The current tranche, which has limited capacity of £500k, aims to deploy capital in a portfolio of 8 startups, not guaranteed. 

• Target return: 3x after 5-7 years (not guaranteed)
• Tax relief available in: 2024/25 tax year (or carry back to 2023/24)
• Minimum investment: £10,000
• Next deadline: 30 August for targeted pre-Budget deployment – not guaranteed

Haatch EIS Fund – deadline 30 Sep

The fund is managed by Haatch Ventures, four successful entrepreneurs who have between them founded, grown and sold businesses achieving personal exits worth over $150 million. It targets early-stage digital transformation businesses in sectors the team knows well, such as software-as-a-service and digital consumer. The team will invest where it believes it can use its considerable experience to add value. The current tranche aims to deploy capital in a portfolio of 4-6 startups, not guaranteed. 

• Target return: 10x after 5-7 years (not guaranteed)
• Tax relief available in: 2024/25 tax year (or carry back to 2023/24)
• Minimum investment: £20,000
• Next deadline: 30 September for targeted pre-Budget deployment – not guaranteed