Seed enterprise investment scheme (SEIS) ― introduction

Produced by Tolley
Seed enterprise investment scheme (SEIS) ― introduction

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

  • Seed enterprise investment scheme (SEIS) ― introduction
  • Tax benefits to the individual
  • Off-the-shelf companies
  • De minimis aid
  • Advance assurance process for SEIS
  • Client marketing letter
  • Process for claiming SEIS relief
  • Planning points
  • Making the claim for SEIS relief

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.

HMRC has published some basic guidance. Unlike the EIS, which will no longer be available for shares issued on or after 6 April 2025, there is no sunset clause for SEIS.

Tax benefits to the individual

The main benefits of the scheme are similar to those for the Enterprise investment scheme (EIS) (see SEIS and EIS ― overview guidance note). There are no particular tax reliefs available to a qualifying company that is seeking investment. The tax reliefs are given to the investor. Under SEIS, the key incentives for investors are as follows:

  1. income tax relief for the investor of up to 50% of the amount invested, up to an annual subscription limit of £100,000

  2. gains on disposals of SEIS shares after three years may be exempt from CGT

  3. gains on disposal of any assets that are reinvested in SEIS shares attract CGT exemption against 50% of the subscriptions (100% in 2012/13)

  4. losses on disposals of SEIS shares are allowable for CGT purposes and eligible for the share loss relief

  5. SEIS investments should qualify for IHT BPR after two years’ ownership (see the BPR overview guidance note)

ITA 2007, Part 5A, ss 257AB–257HG; TCGA 1992, ss 150E–150F

Off-the-shelf companies

The SEIS is intended to encourage investment in companies that are even smaller and even more high-risk than those that may seek investment under the EIS. The company’s business must be very new.

It is not uncommon for an off-the-shelf company to be purchased before commencement of an SEIS business and an issue of SEIS shares. For shares issued prior to 6 April 2013, any ‘on-the-shelf period’ is ignored. This means that a period during which the issuing company has not issued shares other than subscriber shares and has not

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