The Seed Enterprise Investment Scheme (SEIS) is a scheme that offers Income Tax and Capital Gains Tax (CGT) benefits for investors in new businesses by providing significant tax reliefs.
Key Benefits for Investors:
- Income Tax Relief: Investors can claim 50% relief on their investment, with a maximum annual investment limit of £200,000.
- Capital Gains Tax Relief: A 50% exemption is available on gains reinvested under the SEIS, up to a maximum of £100,000. This relief will be withdrawn if SEIS relief is subsequently withdrawn.
- Capital Gains Tax Exemption: A 100% exemption from CGT is granted on shares sold more than three years after their issue date.
- Inheritance Tax Relief: SEIS investments typically qualify for 100% relief from Inheritance Tax, provided the usual conditions are met.
The SEIS is highly popular due to its significant tax advantages, but it is important for investors to conduct proper due diligence. The scheme’s generous rewards come with risks, including the potential loss of the investment and associated tax relief.
Additionally, investors need to meet specific conditions to qualify for the scheme. Small business owners may also use the SEIS to invest in their own businesses under certain circumstances.
Get in touch with our Director of Tax Advisory Emily Hillier for more information about how we can help.