SEIS
Many founders are confused about the SEIS age limit rules specifically, because they are relatively opaque, so lets start there!
The HMRC manual states: A ‘new qualifying trade’ is defined in S257HF as being one which has not been carried on by either the company or by any other person for longer than three years at the date of issue of the shares (two years for shares issued prior to 6 April 2023).'
The 3 years clock starts ticking on the date that you being your trade. Trade means, broadly, that you try selling something.
The following does not begin trading: incorporating your company, developing a product, buying services, employing people, launching a website without the ability to sell a product.
In theory you could incorporate in 2015, spend 10 years developing a product and start to sell it in 2026 and that would start the 3 year clock ticking.
Some important notes:
- The start of trading date can occur before you even incorporate the company. This is due to the caveat "by either the company or by any other person". If you started your company selling product as a sole trader in 2020 and then incorporate a new company today and continue the same trade then you'll already have broken the 3 year rule and be ineligible for SEIS.
- Trading date is selling anything in your company, not just your intended trade. For example, you incorporate in 2020, do a days consultancy for £500 in the same year and then get your head down to develop a SaaS app. You decide to go for SEIS funding in 2026, only to discover that this single day of consultancy and already destroyed your SEIS eligibility. Sure, you can potentially open up a new company and transfer the IP etc (but only if you've not sold your app in the current company!), but it's complicated and expensive.
And now to EIS
Much more straightforward, the 7 year limit starts when you make your first sale.
the age limit of a company’s “new qualifying trade” from 2 to 3 years.
