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Your 101 guide to SEIS

by Sable International | Jul 03, 2014
  • Introduced in 2012, the Seed Enterprise Investment Scheme (SEIS) was made permanent in Chancellor Osborne's Budget Speech in March.

    What is SEIS?

    SEIS is essentially a tax break designed to help new companies in the UK, thereby stimulating entrepreneurship and boosting economic growth. The scheme is not  targeted directly at the small business owner, but rather at those who invest in small and early stage companies, by offering a range of tax reliefs to individual investors who buy shares. The risk to investors is drastically reduced, making the prospect of investment in a small, unquoted company more attractive.  

    The maximum subscription per investor is £100,000 per annum, yielding a potential tax liability reduction of £100,000 per annum. SEIS investors can input £100,000 in a tax year, which can be spread over a number of companies. 

    Benefits to investors

    • 50% tax immediate tax relief on SEIS investments. Tax relief can be backdated
    • Tax-free capital gains
    • Tax relief for losses
    • Capital gains tax deferral relief SEIS investments are exempt from inheritance tax after two years of holding the investment. This is, however, subject to the company being allowable under Business Property Relief.

    To qualify for the scheme as a company

    • The company may not have gross assets greater than  £200,000
    • All capital employed must be actively engaged within 24 months
    • The company must not be listed
    • The company must have fewer than 25 employees
    • The company has to trade in an approved sector – generally not in finance or investment
    • The company must be a UK company with a permanent establishment in the UK.

    To qualify for the scheme as an investor

    • The investor may not have more than a 30% interest in the company (personally or through ‘related parties’)
    • No partner, spouse, relative or associate of the investor may have other interests in the company
    • The investor must not have any form of preferential shares
    • The investor must not have any other form of controlling interest in the company
    • An investor may not be employed by the company at any time during the period from date of issue of the shares, to the third anniversary of that date. An investor will not be treated as employed by the company if they are a director of the company.

    For SEIS guidance, advice and information, get in touch with our accounting team. 

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