Individuals can invest up to £100,000 in a single tax year, spread out between qualifying companies and they must not hold more than a 30% stake in any of the companies they invest in.
The maximum your business can obtain through investments is £150,000 and you must not have previously raised money through other VCT schemes or under EIS.
SEIS RELIEF
Income Tax Relief
An investor in an SEIS eligible business can claim back up to 50% of the value of their investment in the form of income tax relief. Therefore, an investment of £10,000, for example, will save £5,000 in income tax.
Loss Relief
If the company fails, the investor may claim loss relief. The amount of loss relief you can claim is equivalent to the rate of income tax you pay. For example, if you pay a rate of 45% income tax, you will be able to claim up to 45% of your net loss in income tax relief.
Capital Gains Tax Relief
Investors get exemptions from Capital Gains Tax on earnings from shares. Profits realised within 3 years are also exempt from Capital Gains if reinvested in the SEIS.
QUALIFYING CRITERIA
There are various conditions to be met for the company to qualify for the SEIS scheme. The company must:
- Be a qualifying trade (a trade which is conducted commercially)
- Be based in the UK with a permanent establishment
- Be less than 2 years old
- Have fewer than 25 employees
- Have assets of less than £200,000
- Have been trading for at least 4 months before they can be eligible for SEIS
- Not be trading on a recognised stock exchange at the time of the share issue and do not plan to do so
- Not control another company, other than its qualifying subsidiaries
- Not be a 51% subsidiary or controlled by another company. Any property management subsidiaries must be 90%
- Not be in financial difficulty
THE FOLLOWING TRADES WILL NOT QUALIFY
- Property Development
- Provision of Legal or Accounting Services
- Banking, Insurance or any other Financial Activities
- Coal and Steel Production
- Leasing/Letting of Assets on Hire
- Operating/Managing Hotels or Care Homes
- Farming
All tax reliefs under the scheme will be withheld/withdrawn from investors if the company does not follow the rules for at least 3 years after the investment is made.
The above are general conditions relating to the Seed Enterprise Investment Scheme and each company should be reviewed on a case by case basis.
FURTHER INFORMATION
For further information, or to book a free consultation,
please contact Parminder Chattha
or Virali Patel
on 0207 309 2222.
Parminder Chattha
Parminder is a CTA qualified Corporate Tax Specialist with significant R&D Tax experience.
Virali Patel
Virali specialises in Research and Development tax relief, an area which she has been solely focusing on since 2016.
