Seed Enterprise Investment Scheme (SEIS) – An Overview

EMW

30th July 2018

Disclaimer: The purpose of this note is to provide a brief overview as to what SEIS is, what tax reliefs are available for investors, what the qualifying criteria for the company, the shares and the investor are, and to also provide a summary of the process of how to obtain the tax relief. It is not intended as legal advice. In the case of specific problems we recommend that professional advice be sought.

What is SEIS and why should it interest you?

SEIS stands for Seed Enterprise Investment Scheme, a scheme which gives tax reliefs to individual investors for certain investments in unquoted companies. If your start-up or early stage business is looking for investment from individuals, being SEIS-compliant can help attract funding as it is a very tax-efficient way for them to invest.

Relief 1: Income Tax

Provided that the investor holds qualifying shares for three years, the investor’s income tax liability is reduced by 50% of the sums invested, up to the annual investment limit (currently £100,000).

The relief is available for the tax year in which the shares are issued but the investor may elect to treat the shares as having been issued in the previous tax year.

By way of example, in the 2015 – 2016 tax year Adam invests £100,000 by way of subscription for new ordinary shares in a qualifying company. Adam’s income tax liability for 2015 – 2016 is reduced by £50,000 (50% of £100,000).

Relief 2: Capital Gains Tax

Provided that the investor holds qualifying shares for three years, the investor is exempt from any liability to pay capital gains tax on a disposal of the qualifying shares.

For more information about the conditions and process to apply for SEIS, please read the document on our website here: http://bit.ly/2K8gG3s, or contact Kirsty Simmonds.

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