The bi-annual report shows that in 2015-16 the number of companies raising funds under EIS increased to 3,470 while the amount raised fell slightly to £1,88bn. Half (53%) of funding was raised by companies using EIS for the first time.

A large proportion of companies receive relatively small investments, with 44% (1,540) of companies receiving investments of £150,000 or less in 2015-16. This is a similar proportion to recent years. At the same time, 47% (£888m) of the amount of funds is concentrated in investments above £2m with 25% (£466m) going to investments between £4m and £5m.

The number of investors claiming income tax relief on self assessment forms under EIS increased from 32,210 in 2014-15 to 32,770 in 2015-16. The majority tend to invest smaller amounts of money and 80% of EIS investors made a claim for tax relief in respect of an investment of less than £50,000 The number of investors claiming relief for investments of up to £5000 has increased by 18% from 8,490 investors in 2014-15 to 10,040 in 2015-16, which HMRC says is a possible result of the increasing use of crowdfunding platforms.

In 2015-16, the data shows that 2,360 companies received investment through SEIS and £180n of funds were raised, £500,000 more than the previous year. Over 1,800 of these companies were raising funds under SEIS for the first time, raising a total of £154 m in investment. The average investment per company under SEIS in 2015-16 was around £76,000.

The majority of companies receive investments of over £50,000 through SEIS, with 55% of companies receiving investment of over £50,000 in 2015-16. Investments of over £50,000 contributed 85% of the total amount of SEIS investment raised.

Andrew Hubbard, a tax consultant at RSM, said: ‘The latest statistics show that the amount of EIS and SEIS investment has gone up, although the number of companies which have raised money through these schemes has remained broadly static. In other words, the increase in investment is because investors are prepared to put higher amounts into companies rather than because more companies are seeking investment. 

‘Indeed, the number of companies seeking EIS investment for the first time is broadly at the same level as it was in the late 1990s although the total amount invested has increased five-fold.

‘One other point to note is that the number of very small investments via EIS and SEIS has increased quite sharply. One reason for this is that crowdfunding has made EIS and SEIS a realistic proposition for companies to raise money from small investors in way which was not previously practical.

‘At Budget time there is always speculation that these valuable reliefs will be curtailed because they are too generous. That would be a mistake. There is no evidence of abuse of the reliefs – they are working as they should.’

Enterprise Investment Scheme Seed Enterprise Investment Scheme and Social Investment Tax Relief October 2017 Statistics on Companies raising funds is here.

Report by Pat Sweet