Seed Enterprise Investment Scheme
SEIS is designed to help small, early-stage companies raise equity finance by offering tax reliefs to individual investors who purchase new shares in those companies
BTG Corporate Finance has a longstanding reputation in the market for consistently delivering proactive, honest and creative advice - recognised by many of the UK’s leading financial institutions.
The services we deliver to SMEs through our partner-led team includes guidance and support on the Seed Enterprise Investment Scheme (SEIS): a tax relief for start-ups introduced by Finance Act 2012.
What is SEIS?
From 6 April 2012, the Seed Enterprise Investment Scheme (SEIS) was introduced enabling certain individual investors to benefit from generous tax reliefs for investing into start up companies.
The scheme is designed to help small, early-stage companies raise equity finance through these tax reliefs to individual investors who purchase new shares in those companies. It operates in a similar fashion to the succesful EIS scheme but offers more attractive tax incentives in exchange for investment in to smaller, higher risk businesses.
The scheme will provide taxpayers, who invest up to £100,000 in a qualifying new start-up business, with income tax relief of 50 per cent.
What are the benefits of SEIS for investors?
- Investors can receive initial income tax relief of 50% on investments up to £100,000 per tax year in qualifying shares issued on or after 6 April 2012
- A CGT exemption will offered in respect of gains realised on the disposal of assets in 2012-13, that are reinvested through SEIS in the same year
- The individual investor can be a director of the company, but not an employee
- An individual’s stake in the company can be no more than 30%
- SEIS tax relief applies only to recently incorporated companies
- The company must have 25 or less employees and gross assets of up to £200,000
- For 2012-2013 only, a CGT exemption will be offered in respect of gains realised on the disposal of assets that are invested through SEIS in the same year.
It is also important to recognise that SEIS relief can be claimed up to five years after the 31st January in the year you made the investment.
We are finding that with the relative novelty of the scheme and how it affects UK corporates, some accountants and financial advisers are struggling to offer appropriate counsel. At BTG Corporate Finance, we have already advised over a dozen start-ups who qualify for SEIS and are already seeing the tax benefits of it.
For more information or a free consultation, contact BTG Corporate Finance today.