Guidance

Venture capital schemes: raise money by offering tax reliefs to investors

Schemes for qualifying companies or social enterprises with fewer than 500 employees who issue new shares or securities in their company.

How venture capital schemes work

There are 4 schemes designed to help small or medium sized companies and social enterprises grow by attracting investment. They offer tax reliefs to individuals who buy and hold new shares, bonds or assets for a specific period of time. These schemes are sometimes known as tax advantaged venture capital schemes.

You can ask HM Revenue and Customs (HMRC) to check if your proposal to raise money is likely to qualify before you go ahead.

Who can apply

You may be able to apply if your company or social enterprise:

  • has a permanent base in the UK
  • carries out a trade that qualifies
  • does not buy or sell its shares on a recognised stock exchange at the time of the investment
  • meets the qualifying conditions of whichever scheme you opt for
  • makes its first sale, product or service, within 7 years or 10 years for knowledge intensive companies

Trades that qualify

Most trades will qualify, including any research and development which will lead to a qualifying trade.

However your company may not qualify if most of your trade includes things like:

  • coal or steel production
  • farming or market gardening
  • leasing activities
  • legal or financial services
  • property development
  • running a hotel
  • running a nursing home
  • generation of electricity, heat, gas or fuel

Find a full list of, and more information about non-qualifying trades.

Limits on the money you raise

There’s no minimum, but there’s a maximum amount you can raise depending on which scheme you opt for. The maximum amount you can raise from all the schemes added together is:

  • £5 million in any 12 months
  • £12 million during the lifetime of your company

There may be higher limits if your company carries out research and development and innovation and meets certain conditions.

The Enterprise Investment Scheme (EIS)

Your company may qualify if you’ve been trading for at least 4 months and have:

  • no more than £15 million in gross assets
  • fewer than 250 employees or 500 employees if you meet certain conditions

Find out more about EIS.

The Seed Enterprise Investment Scheme (SEIS)

Your company must be a new trade that’s been trading for less than 2 years and have:

  • no more than £200,000 in gross assets
  • fewer than 25 employees

But you won’t qualify if you’ve already had investment through EIS or a VCT.

Find out more about SEIS.

Social Investment Tax Relief (SITR)

Your organisation must be a Social Enterprise like a:

Your organisation may qualify if you have:

  • no more than £15 million in gross assets
  • fewer than 500 employees

Find out more about SITR.

Venture capital trust (VCT)

A VCT is a company that’s authorised by HMRC, the VCT may invest in your company if you have:

  • no more than £15 million in gross assets
  • fewer than 250 employees

Find out more about VCTs.

Published 1 January 2016