The Seed Enterprise Investment Scheme (SEIS) provides investors with fantastic tax-efficient incentives in exchange for investment in the UK small and early-stage startups. Through encouraging creative business and entrepreneurship, SEIS was intended to stimulate economic growth in the UK. This is a similar scheme as EIS but is aimed at smaller companies. The scheme is available from 6 April 2012.
Income tax relief at a rate of 50% of the amount invested. This is subject to a maximum investment of £100,000 per year (in all SEIS companies).
The shares are subject to a Capital Gains Tax exemption where the SEIS shares are sold after 3 years or more of ownership (as for EIS).
A further Capital Gains Tax exemption is available where you re-invest any gain made from the sale of an asset into SEIS shares. For 2012/13 100% of the amount re-invested is exempt from CGT and for 2013/14 it is 50% of the amount re-invested.
Individuals Who Qualify For Tax Relief
Directors can qualify, but current employees cannot. Previous employees do qualify.
The individual cannot be connected to the company, in broad terms this means owning less than 30% of the company.
The SEIS Company
The maximum that can be raised through SEIS is £150,000 in total (not an annual limit). The assets of the company must not exceed £200,000 before the issue of the SEIS shares.
The company must have fewer than 25 full-time employees (or equivalent part-timers) immediately before the shares are issued.
The company must be carrying out a qualifying trade. The trade must have been carried out for less than 2 years, whether that was through the company or as an individual.
Companies with subsidiaries can qualify.
There are a number of anti-avoidance rules in place, which are largely derived from the EIS rules.
How We Can Help You
Accotax can advise you on all aspects of qualification for both income tax and capital gains tax reliefs for SEIS investments.