SEIS—conditions for relief: issued shares, the funds raised and arrangements in general

The following Tax practice note provides comprehensive and up to date legal information covering:

  • SEIS—conditions for relief: issued shares, the funds raised and arrangements in general
  • Risk to capital condition
  • Conditions relating to shares
  • Conditions relating to funds raised
  • Meaning of period B
  • Meaning of qualifying business activity

SEIS—conditions for relief: issued shares, the funds raised and arrangements in general

IP COMPLETION DAY: The Brexit transition period ended at 11pm on 31 December 2020. At this time (referred to in UK law as ‘IP completion day’), transitional arrangements ended and significant changes began to take effect across the UK’s legal regime. This document contains guidance on subjects impacted by these changes. Before continuing your research, see Practice Note: What does IP completion day mean for Tax?

The seed enterprise investment scheme (SEIS), like the enterprise investment scheme (EIS), is designed to encourage investment in smaller, higher-risk trading companies by offering a range of tax reliefs to individual investors purchasing newly issued shares in those companies.

To be eligible for SEIS relief the regime imposes numerous requirements that must be met, including in relation to:

  1. the arrangements in general, the issued shares and the funds raised

  2. the individual investors, and

  3. the issuing company

This Practice Note focuses on the conditions that must be met in relation to the arrangements in general, the issued shares, the purpose of the issue of shares, and the amount and use of the money raised. These conditions are described in the context of the income tax relief provided for in Part 5A of the Income Tax Act 2007 (ITA 2007).

Relief from capital gains tax (CGT) (under the disposal exemption or re-investment

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