Seed Enterprise Investment Scheme

21 May 2024

The SEIS provides for extensive Income Tax and Capital Gains Tax (CGT) breaks for investors who invest in new businesses and offers taxpayers significant tax benefits.

For investors, the main benefits of the scheme are as follows:

  • Income Tax relief worth 50% of the amount invested to qualifying individual investors on a maximum annual investment of £200,000.
  • A 50% exemption from CGT on gains reinvested within the scope of the SEIS. The maximum gain to be relieved is capped at £100,000 and the relief will be withdrawn if the SEIS relief is ultimately withdrawn.
  • There is a 100% exemption from CGT on the sale of shares more than three years after the date on which they were issued.
  • An SEIS investment will normally qualify for 100% relief from Inheritance Tax where the usual conditions are met.

The availability of both Income Tax and CGT relief has made the SEIS a popular scheme. The reliefs are only available where there is sufficient liability to set against. Under certain circumstances, small business owners can also use the scheme to invest in their own businesses.

Investors must be careful to conduct proper due diligence on any investments made as the generous tax rewards of the scheme do not always offset the risks. Investors must be aware that they can lose more than they invested, including the tax relief. There are also a number of conditions which must be met in order to invest in the scheme.

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