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HMRC EIS and SEIS statistics round-up

By 21st June 2018 No Comments

HM Revenue & Customs (HMRC) have released the May 2018 National Statistics Publication, which provides the 2016-17 funds raised estimates for Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS)

The HMRC commentary outlines the number of companies raising funds, the number of subscriptions and the amount raised through the tax efficient schemes.

Due to the timing of the release, the current results for 2016-17 are just estimates, making them provisional. The next report, due to be released in Spring 2019, is likely to show higher data as many applications may still be in HMRC’s system. HMRC plan to release their data on an annual basis moving forward.

Year on year, this report is highly anticipated as it reflects the great contribution tax efficient schemes are making to SMEs and UK economy.

Martin Sherwood, Founding Partner of The Enterprise Group and the Enterprise Investment Scheme Association (EISA) said: “The recently announced EIS investment levels for 2016-17 are broadly in line with expectations, demonstrating the impact of several rule changes two years ago.”

That being said, as Christian Elmes, Founding Partner of The Enterprise Group and non-executive board member to a number of leisure and hospitality companies highlights: “It is pleasing to see companies using the EIS scheme for the first time raised a total of £768 million (42% of all EIS investment) and a good showing from Information and Communication sector raising £669 million (37% of all EIS investment).”

Enterprise Investment Scheme (EIS)

  • Since the launch of Enterprise Investment Scheme (EIS) 27,905 companies have received investment and over £18 billion of funds have been raised.
  • In 2016-17, 3,470 companies raised a total of £1,797 million of funds under the EIS scheme.
  • In 2015-16, 3,545 companies raised £1,954 million of funds. Changes in EIS eligibility rules are likely to have contributed to reducing investment in 2016-17; however, the figures are likely to be revised upwards as more returns are received.
  • In 2016-17, the 1,490 companies raising funds for the first time under the EIS scheme raised a total of £768 million of investment.
  • In 2016-17, companies from the Information and Communication sector accounted for £669 million of investment (37% of all EIS investment).
  • London and the South East accounted for the largest proportion of investment with companies registered in these regions receiving 67% of the investment in 2016-17.

Seed Enterprise Investment Scheme (SEIS)

  • In 2016-17, 2,260 companies received investment through the Seed Enterprise Investment Scheme (SEIS) and £175 million of funds were raised. This is slightly lower than in 2015-16, when 2,405 companies raised a total of £182 million, but the 2016-17 figure is likely to be revised upwards as more returns are received.
  • Over 1,700 of these companies were raising funds under SEIS for the first time in 2016-17, representing £148 million in investment.
  • In 2016-17, companies from the Information and Communication sector accounted for £68 million of investment (39% of all SEIS investment).
  • London and the South East accounted for the largest proportion of investment, with companies registered in these regions receiving 63% of SEIS investment in 2016-17.

Conclusion

As Christian explains, there are some promising estimates from HMRC present:  “The 2016-17 EIS and SEIS inflows, adjusting for likely upward revision later this year, are broadly in line with 2015-16, showing the schemes continue to be effective in raising vital capital for UK start-up and growth businesses.” Martin suggests that change could be on the horizon: “SEIS remains consistently at just under 10% the size of the EIS market” noting that “it will be interesting to see if this rises over the next two years, as the new EIS conditions begin to bite.”

Martin Sherwood thought the regional report declaring that over 60% of investments were made in  London and the South East, was “a little depressing” as it highlighted the “challenge we all face in making SEIS and EIS better known and more frequently used in the regions.”

As Christian points out, it is key to note that “these figures pre-date the new Risk to Capital condition applied to the venture capital schemes, announced in the Budget last year, which is likely to have had an impact on investment levels at the end of the 2017-18 tax year, as investors, companies and the industry at large digest these changes.” Martin agrees and believes “it will be interesting to see the figures for 2017-18 and 2018-19 as and when they become available.”
If you would like more information on tax efficient opportunities or anything else our partners would be happy to assist.

Martin Sherwood, Partner

Martin Sherwood has many years’ experience of small company fundraising and in particular the tax-efficient investment market, specialising in the Hospitality & Leisure Sectors. Martin is currently chairman of the four British Country Inns companies and of Halcyon Hotels and Resorts plc, which was a major investor in Luxury Family Hotels, which he helped launch 20 years ago. He was founder and head of Tax Efficient Solutions, first at Teather & Greenwood (1997-2004) and subsequently at Smith & Williamson (2004-2010), which he left to found Enterprise.

Martin has been closely involved in both Venture Capital Trusts and Enterprise Investment Schemes since their inception, and is a founder director of the EIS Association, the official trade association of the EIS industry.

Martin works very closely with a wide range of Hospitality & Leisure entrepreneurs and has a significant network of investors and professional contacts as well as being a serial investor in his own right.

Christian Elmes, Partner

Christian Elmes trained at PwC and qualified as a chartered accountant in 1999, before moving to Morgan Stanley (2000-2002) as Associate in the Investment Banking Division (IBD).

He was appointed Director of Finance, Teather & Greenwood Investment Management in 2002 and moved with the Tax Efficient Solutions team to Smith & Williamson in 2004, becoming Deputy head of the department. He left to co-found Enterprise in 2011.

Over the last ten years, Christian has been responsible for developing a number of tax efficient products, particularly Enterprise Investment Schemes. He is able to lead on tax efficient product development from inception through to completion, because of his financial and tax background and commercial experience.

Christian is competent across a broad range of sectors including, leisure and hospitality, media, property and renewable energy.
Christian is a non-executive board member to a number of leisure and hospitality companies, Casper & Cole Ltd, Wright & Bell Ltd, Albion & East Ltd, Camm & Hooper Ltd and Darwin & Wallace Ltd.

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