Seed enterprise investment scheme (SEIS) ― introduction

By Tolley

The following Owner-Managed Businesses guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Seed enterprise investment scheme (SEIS) ― introduction
  • Tax benefits to the individual
  • Differences from EIS
  • De minimis aid
  • Planning points

The SEIS, like the Enterprise Investment Scheme (EIS), is designed to encourage individuals to invest money in shares issued by qualifying unquoted companies, though is specifically aimed at smaller companies which have only recently begun to carry on a qualifying trade.

The schemebecame effective from 6 April 2012 and HMRC have since published some basic guidance .

FA 2012, Sch 6

A number of changes to the schemewere announced in Budget 2013. See the Budget 2013 ― Owner-managed businesses overview news item. These changes, effective from 6 April 2013, were:

  • to allow 'off the shelf' companies to be qualifying companies for SEIS purposes
  • the introduction of a capital gains tax exemption for 2013/14 on half the qualifying SEIS investment

FA 2013, ss 56–57

Further to this, at Budget 2014, it was announced that the capital gains tax exemption equivalent to half of the SEIS subscription would be made a permanent feature of SEIS. In addition, the sunset clause on the SEIS schemewas removed and it was made permanent. See the Budget 2014 ― Owner-managed businesses overview news item.

FA 2014, ss 54–55

Finally, minor changes were introduced by Finance Act (No 2) 2017, s 11, that relaxed the restrictions for share restructuring. The condition that requires no prearranged exits was broadened to allow shares in the issuing company to be exchanged for, or converted into, shares of a different class in that company.

Tax benefits to the individual

The main benefits of the schemeare similar to those for the Enterprise investment scheme(EIS). SEIS can be more beneficial for individuals as the key incentives are:

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