The SEIS Investment (Seed Enterprise Investment Scheme) provides great tax-structured benefits to investors. In exchange for investment in early and small stage startup businesses. SEIS was created to enhance economic growth in the UK by encouraging new enterprise and entrepreneurship.
SEIS is designed to support early-stage and small trading companies. To raise finance by giving a range of tax reliefs to investors by buying new shares in those companies.
Main Features of the SEIS:
- Capital Gains Tax Exemption
Where the shares are held for at least 3 years and received income tax relief. Any earnings on disposal are completely free from Capital Gains Tax.
- Income Tax Relief
People subscribe for new shares up to the greatest yearly investment. That can claim up to 50% income tax relief on their investment in the year or previous year. Shares must be held 3 years as the least. Form the date of issue for relief to be kept.
- Loss Relief
Once shares are inclined at a loss, subscribers can select the amount of the loss. Reduced any income tax relief given before, to be set against earnings for the year of disposal. Instead of being confined to using such losses against coming capital gains only.
- Greatest tax relief available
The top of these reliefs outcome in the greatest tax relief on the investment made of 86.5%.
SEIS rules for investors:
SEIS relief relates only to individuals and not for examples like trusts or companies. To be certified for Income Tax relief, you cannot be associated with the investee company. By important financial employment or interest. You are acknowledged as being linked to the company if you are a paid partner, employee, or director. The deviation is if you are an unpaid director of the company. Wherein you may still get Income Tax Relief.
You are also attached to the company and also unqualified to get Income Tax relief. If you have a 30% or more interest in the company.
What type of shares are entitled to SEIS relief?
To be permitted for SEIS tax relief, shares must be brand new. Ordinary shares that are not repairable and have no special rights linked to them. Shares must be paid whether in cash or full not any other assets. To be qualified for Income Tax Relief. You cannot avail of a loan to buy the shares if it was only accepted to buy the shares.
You must always take your tax advice before determining whether to invest.