Seed enterprise investment scheme ― tax relief

Produced by Tolley
Seed enterprise investment scheme ― tax relief

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

  • Seed enterprise investment scheme ― tax relief
  • SEIS tax benefits
  • SEIS income tax relief
  • How SEIS income tax relief is given
  • Making a claim for SEIS tax relief
  • Making an SEIS carry back claim
  • SEIS withdrawal of income tax relief
  • Dividends from SEIS investments
  • SEIS ― capital gains relief
  • SEIS ― re-investment relief
  • More...

The seed enterprise investment scheme (SEIS) is designed to encourage individuals to invest in new shares issued by qualifying unquoted companies. SEIS is specifically aimed at very small companies which have only started to carry on a qualifying trade. The scheme complements the enterprise investment scheme (EIS) as it is expected that companies may want to go on to use EIS after an initial investment under SEIS.

HMRC has issued a helpsheet HS393 and guidance at VCM30000 onwards.

See the SEIS and EIS ― overview guidance note for a comparison of the tax reliefs available under SEIS and EIS.

SEIS tax benefits

A subscription for eligible shares of a qualifying SEIS company is a tax efficient investment for the individual who can benefit from the following tax reliefs:

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

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

  3. CGT exemption allows investors disposing of any asset an exemption of up to 50% of their subscriptions in SEIS shares during the same tax year

  4. losses on disposals of SEIS are allowable for CGT purposes

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

SEIS income tax relief

SEIS income tax relief is 50% on the lower of:

  1. the amount subscribed for the shares

  2. the annual limit of £100,000

This income tax relief works in much the same way as the income t

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