How can the SEIS help your business?
Launched in 2012, the Seed Enterprise Investment Scheme (SEIS) was introduced to help small, early-stage companies grow by raising seed funds through individual investors.
The scheme works by offering significant tax reliefs to investors, allowing companies to claim on up to £100,000 invested through the scheme per annum. SEIS companies can be invested in directly, or through an SEIS fund.
SEIS Tax Relief
The SEIS offers a number of tax reliefs to investors, including automatic reductions to loss relief. Just so you’re aware, this can be dependent on your tax bracket, so you’ll need to know what this is.
There are also new rules in place for SEIS approval and to benefit from most of the tax reliefs listed below, you must hold qualifying share for a minimum of three years. The company raising the money principally needs to be shown to be a risky adventure for investors.
At Tax Shop, we have developed ways to make the tax documentation process easier for investors.
SEIS Tax Relief Rules for Businesses
- Your company can only receive a maximum of £150,000 through SEIS investments in its lifetime
- Your company must not have more than £200,000 of gross assets at the time that the shares are issued
- Your company must have been trading for more than 2 years
- You must have fewer than 25 full-time employees
SEIS Tax Relief Rules for Investors
- You can only invest up to a maximum of £100,000 in any number of qualifying companies each tax year
- You must hold the shares for a minimum of 3 years
- You cannot carry-forward your SEIS tax relief
- You must be a UK tax payer
If eligible, you can claim back up to 50% of the value of your investment in the form of income tax relief. So, if you make an investment of £10,000, you can save £5,000 in income tax.
If you decide to sell your shares after having held them for 3 years (minimum), then you may be exempt from paying Capital Gains Tax on earnings from your shares.
If you choose to reinvest gains from other non-SEIS investments into an SEIS eligible company, you will recieve 50% Capital Gains Tax relief on original investments.
This is loss relief if the company fails - if the business performs poorly and you lose money on your investment, you could claim loss relief.
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