Seed Enterprise Investment Scheme (SEIS) – is it right for you?
It’s felt like the first half of 2019 has been dominated by three words – Making Tax Digital (MTD). For some clients the transition has been relatively straight forward with little change to how they currently manage their accounts. For others, we appreciate this isn’t the case and MTD is making more noticeable changes.
As always, your client manager is available to discuss any questions you may have and to help you with the transition.
The Seed Enterprise Investment Scheme (SEIS)
Another acronym that has been a recent topic of conversation is SEIS, the Seed Enterprise Investment Scheme. We’ve noticed that a number of clients have been wanting to understand the benefits of SEIS so we’ve summarised the key points here:
What is SEIS?
Essentially, it’s a series of tax reliefs which are designed to encourage investment into seed-stage start-ups and businesses.
What are the benefits?
There is an initial income tax relief of 50% on investments up to £100,000 each tax year, in qualifying shares. You will not pay capital gains tax when you sell the shares after the qualifying period.
The general criteria of a company looking to secure SEIS investment is that it must have a maximum of 25 employees, have been trading for less than 2 years, and have less than £200,000 in gross assets. There are some excluded trades so it’s important to clarify this with the list provided by HMRC.
An investor can invest a maximum of £100,000 in a tax year, which can be across any number of qualifying companies although the maximum equity stake in a single company can be no more than 30%. The shares must be held for a minimum of 3 years – selling or gifting them before the end of 3 years means the investor will be subject to relief clawback. The investor must be a UK taxpayer.
If you are interested to find out more about SEIS or believe this is a relief you could be entitled to, contact your client manager in the first instance. We can make sure all eligibility criteria is satisfied as well as consider this relief is regards to your other tax affairs.
For more information call 0808 1644 222 or contact us here.