Since 6 April 2012, the Government has implemented a scheme to encourage investment in new businesses. The scheme is called the Seed Enterprise Investment Scheme (SEIS), and it complements the existing Enterprise
Investment Scheme (EIS).
Seed enterprise investment scheme tax relief
The key features of the new SEIS relief can be summarised as follows:
- A qualifying investor will be able to invest up to £100,000 into qualifying companies in a tax year
- They will receive income tax relief of up to 50% of the sum invested
- The relief is given as reduction in tax liability but cannot create a repayment
- Unused relief in one tax year can be carried back to the preceding tax year if there is unused relief available for that year
- The maximum amount that a company can attract in investment qualifying for SEIS is £150,000 in total
- The company must not have net assets of more than £200,000 before any SEIS
- For 2012/13 an individual who makes a capital gain on another asset and uses the amount of the gain in making a SEIS investment will be able to claim reinvestment relief of 100%
- The reinvestment relief is extended for gains made in subsequent years.
Reinvestment relief of 50% of the matched gain will be available where the proceeds are invested in SEIS shares.
As has become the norm in recent years with tax breaks there is a huge amount of antiavoidance legislation to prevent exploitation for tax avoidance purposes.