This article is offered in support of Chimni's SEIS Funding Round. To return to the main article click here
What is the 'SEIS Scheme'
SEIS stands for 'Seed Enterprise Investment Scheme'. It is a government initiative to give significant Tax Breaks and Capital Gains Exemptions to incentivise people to support very early stage businesses like Chimni. SEIS was designed to boost economic growth in the UK by promoting new enterprise and entrepreneurship. Anyone investing receives 50% of their money back as an immediate tax break. On top of that, the investor benefits from a Capital Gains Tax Exemption on any profits that arise from the sale of shares after three years. The net impact for people who pay tax at 45% is that for every £10,000 invested the capital at risk is only £2,750. Investors are allowed to invest up to £100,000 in SEIS schemes each tax year.
There is a good explainer of SEIS on the Wealth Club website here: www.wealthclub.co.uk/seis-explained/
Another good overview of the SEIS on SeedLegals here: www.seedlegals.com/what-is-seis
What Tax Breaks do SEIS Schemes offer
There is a mix of upfront and ongoing tax reliefs:
- Up to 50% income tax relief
- Tax-free growth
- Up to 50% Capital Gains reinvestment relief
- Inheritance tax relief
- Loss relief on exit
Our SEIS is timed to allow investors to seek the tax benefit before the April 5th cut off this year. There is a good article on the SEIS tax relief on the Seedrs website here: https://www.seedrs.com/learn/guides/seis-tax-relief
Crowdcube have done a good job highlighting a group of different investor outcomes here: www.crowdcube.com/seis-tax-relief-explained
There is another good overview on the Wealth Club website here: www.wealthclub.co.uk/seis-tax-relief
How Is The SEIS Fundraise Managed?
Chimni is using the wonderful Seed Legals platform to manage the fundraising process. SeedLegals is an award-winning investment platform and access to the Chimni Term Sheet and other information on the transaction is available through their site. Investors will be invited to join the fundraising within the SeedLegals platform! We would encourage potential investors to review their service and set up a log-in here:
Why does 5th April Matter
Chimni has timed their SEIS raise to allow investors to exploit the financial year end on 5th April. By issuing shares before that date investors are able to claim their tax rebate against 2019/20 income. If this is done, then it enables people to invest again after 5th April with a new 100k allowance. Note: Chimni has put our cut-off date as 31st March as there is a weekend and a Bank Holiday just before Monday 5th April. This will allow us to complete paperwork in time – however, our Term Sheet states that we can close the round early if the target sum has been reached.