SEIS—conditions for relief: qualifying trades

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

  • SEIS—conditions for relief: qualifying trades
  • Meaning of new qualifying trade
  • Meaning of qualifying trade
  • Meaning of substantial
  • Meaning of excluded activities

SEIS—conditions for relief: qualifying trades

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 individual investors

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

  3. the issuing company

A pervasive requirement is that the issuing company (or its group) must carry on a new qualifying trade for the purposes of which the SEIS funds are raised and ultimately spent. The trades that qualify are restricted so as to exclude those considered to be low risk. This Practice Note explains what is meant by a 'new qualifying trade' and a 'qualifying trade', both of which are key to the definition of a qualifying business activity (another term used throughout the SEIS

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