Seed Enterprise Investment Scheme (SEIS)
The Seed Enterprise Investment Scheme (SEIS) provides tax relief for individuals prepared to invest in new and growing companies. It is also known as the “junior” version of the Enterprise Investment Scheme (EIS), and may be more suitable for certain investments.
Under the SEIS, investors can claim generous income tax and capital gains tax (CGT) reliefs for their investment. Companies can also use the relief gained by the scheme to attract additional investment to develop their business further.
What does the Seed Enterprise Investment Scheme involve for investors?
The SEIS allows a qualifying investor to invest up to £200,000 per tax year into qualifying companies. Under the scheme, they will receive income tax relief of up to 50% of the sum invested, and any unused relief in one tax year can be carried back to the preceding tax year.
An individual who makes a capital gain on another asset and uses the amount of the gain in making a SEIS investment will not pay tax on 50% of the liability, subject to certain conditions.
Profits derived from the sale of shares are exempt from Capital Gains tax, provided the shares have been held for a minimum of three years.
In the event of an unsuccessful investment, the government provides loss relief, which can be used to offset tax on other sources of income.
It is also important to note that there is a huge amount of anti-avoidance legislation to prevent exploitation for tax avoidance purposes, so if you’re looking to ascertain whether your company is eligible, it’s essential to speak to an experienced tax advisor.
What is the difference between EIS and SEIS?
SEIS supplements the long established EIS scheme. Under EIS, those investing up to £1 million receive income tax relief at up to 30%. The SEIS encompasses tighter regulations, however provides tax reliefs of up to 50%. The SEIS is mainly suitable for smaller or newer investee companies.
How can Edwards Accountants help?
The Seed Enterprise Investment Scheme may be a valuable pathway to attracting funds at a time when it is difficult to obtain finance from traditional sources.
By speaking to experienced tax advisors at Edwards Accountants, you can ascertain which scheme may be best for your company. Not only this, but we can also provide a range of other services, including Share Option Schemes and R&D Tax Credits.
To find out how our tax services can assist your company, please contact us.
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If you’re looking to invest money or raising funds for your business via the Seed Enterprise Investment Scheme, contact us.