What is the Seed Enterprise Investment Scheme:
SEIS is designed to help small, early-stage trading companies to raise finance by offering a range of tax reliefs to investors purchasing new shares in those companies.
The Seed Enterprise Investment Scheme (SEIS) offers great tax efficient benefits to investors in return for investment in small and early stage start-up businesses in the UK. SEIS was designed to boost economic growth in the UK by promoting new enterprise and entrepreneurship. The scheme was introduced in the Chancellor George Osborne’s 2011 Autumn Statement which heralded a big shake up of tax incentives for investors, with the Enterprise Investment Schemes and Venture Capital Trusts also being revamped.
What are the main features of the SEIS?
Income Tax Relief:
Individuals subscribing for new shares up to a maximum annual investment of £100,000, can claim up to 50% income tax relief on their investment in the year of investment or the previous year. Shares must be held for a minimum of three years, from the date of issue for relief to be retained.
Capital Gains Tax Exemption:
Where income tax relief has been received and the shares are held for at least three years, any gains on disposal are entirely free from Capital Gains Tax.
Loss Relief:
If shares are disposed of at a loss, subscribers can elect for the amount of the loss, less any income tax relief previously given, to be set against income for the year of disposal, rather than being restricted to using such losses against future capital gains only.
What kind of companies qualify for SEIS?
- To be SEIS-qualifying, a firm must be small and unquoted, have traded for a maximum of 2 years, have gross assets of less than £200,000 and fewer than 25 employees at the time of investment.
- As with EIS, some companies and sectors are excluded, including those dealing in land, commodities or shares.
