The Seed Enterprise Investment Scheme (SEIS) offers generous tax relief to investors who subscribe for shares that equate to a stake of less than 30% in the company.
The new scheme is similar to the Enterprise Investment Scheme (EIS) but the SEIS focuses solely on direct investment into start-up companies with the intention of making it easier for these companies to grow and become established.
The Seed Enterprise Investment Scheme explained:
What are the investment amounts?
- Investors can input £100,000 in a single tax year.
- Maximum of £150K, including any State Aid received by the company in three preceding years.
- Investors cannot control the company receiving their capital.
What can the investor expect?
- Income Tax relief at the rate of 50% in the tax year the investment is made.
- Disposal of the shares will be exempt from Capital Gains Tax once they have been held for 3 years.
Which companies qualify?
- A qualifying company must be unquoted.
- Be UK based with 25 employees or fewer.
- Have gross assets of upto £200K.
- Have not received any previous EIS or VCT investment.
- Trading less than 2 years.
- Be carrying on, or preparing to carry on, a new qualifying trade throughout the three year period from the date of issue of the shares.
Which trades do NOT qualify?
Most trades do qualify but there are some exceptions. A trade does not qualify if it consists wholly, or substantially, of “excluded activities”. A list of the “excluded activities” can be found by clicking here.
How can Blue Sky Corporate Finance help you?
To find out more contact our experienced corporate finance team who will be happy to provide more details on the Scheme, advise on its suitability for you, and assist should you wish to pursue this further.
This article is intended to inform and is based on legislation and practice at the time.