Seed Enterprise

Investment Scheme

The Seed Enterprise Investment Scheme (SEIS), like the Enterprise Investment Scheme (EIS), is designed to encourage individuals to invest money in shares issued by qualifying unquoted companies trading wholly or mainly in the UK.

 

The scheme became effective from 6 April 2012 with further minor changes to the scheme being announced in the Budget 2013.

 

The legislation currently provides for the SEIS to run from April 2012 to April 2017, but it may be extended. The scheme seems to be highly successful and with green shoots just starting to show in the UK Economy, we wouldn’t be surprised if it was extended.

 

SEIS investments seem to work incredibly well with the emergence of new ‘crowd funding’ websites such as Crowdcube and Seedrs and many SEIS investment opportunities can be found on such sites.

 

In order to attract investment ‘advance assurance’ can be requested from HMRC that the investment opportunity qualifies under the SEIS rules.

 

Furthermore, when trying to obtain investment it is highly likely that an investment prospectus will need to be drafted to give to potential investors.

We have experience in obtaining advance assurance from HMRC and have prepared investment proposals and implemented SEIS schemes for many clients.

 

The main benefits of the scheme are similar to those for the Enterprise Investment Scheme (EIS). SEIS is more geared towards new Start Ups and the tax benefits more beneficial than EIS.

 

The key incentives are:

 

  • income tax relief for the investor of up to 50% of the amount invested, up to an annual limit of £100,000
  • gains on disposals of SEIS shares after three years may be exempt from CGT
  • CGT exemption allows investors disposing of any asset in 2012/13 an exemption against subscriptions in SEIS shares during the same tax year.
  • CGT exemption allows investors disposing of any asset in 2013/14 an exemption against half of their subscriptions in SEIS shares during the same tax year
  • losses on disposals of SEIS are allowable for CGT purposes
  • SEIS investments should qualify for Inheritance Tax ‘Business Property Relief’ after two years’ ownership.

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