THE Seed Enterprise Investment Scheme (SEIS) is an incentive to invest in new small company businesses and allows equity investors to obtain immediate tax relief of up to 78 per cent.
The investor’s tax liability is reduced by 50 per cent of the investment, up to £100,000. The relief can be carried back to the preceding tax year. Relief from Capital Gains Tax is also available, providing an additional tax incentive of up to 28 per cent and the actual shares can be CGT free.
Further reliefs are available in respect of Inheritance Tax and possible scope for loss relief against income should the investment fail. By maximising the tax breaks there may be little or no loss to the investor if the business flounders.
Shares must be held for at least three years. The investor cannot be an employee but can be a director. The investor, with ‘associates’, must not own more than 30 per cent of the company.
Associates include immediate family members, but siblings, unmarried couples and parents in law are not excluded and could qualify.
The business must have less than 25 employees and assets of up to £200,000. The investment must be spent on qualifying activities, which excludes some land-based businesses. There is significant scope for the start-up businesses to benefit from the scheme.
Investors can benefit from tax breaks, which help ‘de-risk’ the investment. Some ‘crowdfunding’ platforms are also now facilitating SEIS, allowing individuals to invest small sums, providing useful funding for the business.
For more information contact me on firstname.lastname@example.org or 01573 224391.