1 . Seed Enterprise Investment Scheme The Seed Enterprise Investment Scheme ( SEIS ) offers a number of tax reliefs to individuals who subscribe for shares in qualifying companies . For companies looking to raise finance may benefit from SEIS . This scheme is subject to detailed conditions .
Odiri Tax Consultants can advise you on the conditions that need to be satisfied and can prepare the necessary forms for submission to HM Revenue & Customs .
2 . SEIS Income Tax Relief Income tax relief is available at a rate of 50 % to an individual who makes a cash subscription for shares in a qualifying company . The maximum qualifying annual investment is £ 100,000 and the available income tax relief is therefore restricted to £ 50,000 per year .
Investors do not need to be UK resident but they must have a UK tax liability against which to set the income tax relief . The relief is capped by the total tax actually paid in the year and therefore a repayment of tax cannot be generated by any excess .
There is also a carry back facility to allow all or part of the relief to be given in the preceding tax year . If the shares qualifying for SEIS income tax relief are disposed of and this results in a capital loss , the investor can elect for the loss , less any income tax relief already received , to be set against general income received in the year of disposal and / or the preceding year , rather than the capital losses being offset against capital gains .
3 . Capital Gains Tax Relief If an investor claims income tax relief and the SEIS shares are held for more than three years , any gain made on the disposal of the shares will be exempt from capital gains tax ( CGT ).
Where other assets are sold and chargeable gains arise , SEIS reinvestment relief may be available to exempt part of the gain . Chargeable gains arising in any given tax year which are reinvested into qualifying SEIS shares during the same tax year will be eligible for capital gains tax relief equal to 50 % of the qualifying reinvested amount . The relief is restricted to £ 50,000 .
4 . Withdrawal of SEIS Income Tax Relief Income tax relief and capital gains reinvestment relief completely claw back or reduced if , at any time during the three years from the date of issue of the shares , if any of the following events occurred :
· the investor becomes an employee of the company ( the investor can however be a director of the company , provided they do not receive value from it )
· the shareholding in the company becomes a substantial interest ( see below )
· the company loses its qualifying status
· the investor disposes of their shares ( other than to a spouse or civil partner );
· the investor or their associate receives value from the company , or from a person connected with that company . ( This applies from the date of the company ’ s incorporation rather than the date of issue of the shares .)
5 . Qualifying Company Conditions The company must be an unquoted trading company that is not controlled by any other companies . The company ’ s gross assets must not exceed £ 200,000 before any SEIS investment and employed less than 25 full-time equivalent employees . In addition to this the company must be UK resident , or have a permanent establishment in the UK .