Number of start-up SEIS applications jumps 73% as interest in scheme grows
Government-backed investment initiative provides tax breaks for start-up investors
The number of start-ups applying for funding through the government’s Seed Enterprise Investment Scheme (SEIS) has jumped 73% in a year, according to figures released today.
Research conducted by private equity investor Radius Equity found that 2,582 start-ups applied to HMRC for permission to raise funds through the scheme in 2013/14, a significant increase on the 1,644 applications made the previous year.
Introduced by the government in the 2012 Budget, the SEIS is intended to stimulate investment in seed-stage businesses by providing a number of tax reliefs on investments, including 50% income tax reliefs on amounts of up to £100,000 per year.
Originally intended to last two years, it was revealed in this year’s Budget that the scheme would be made permanent, drawing widespread approval from start-ups, investors and business leaders.
SEIS is the junior counterpart to the Enterprise Investment Scheme (EIS), a similar initiative aimed at helping more established businesses achieve the next stage of growth.
Radius Equity’s figures revealed that 2,718 businesses applied for permission to raise money through the EIS last year, marking a more modest 16% increase on the year before.
Stephen Norton, a director at Radius Equity, said: “The fantastic tax breaks the Government has put in place are attracting huge numbers of start-ups and investors. This funding encourages growth and provides a real boost to the economy.
“Start-ups and early stage businesses have found it very difficult to borrow from the banks since the financial crisis because the banks have been under significant pressure from the regulators to rebuild their balance sheets.
“The introduction of the SEIS provided a new option to start-ups looking to finance their growth plans that was not available before.”