Early stage UK Company Investment tax incentive – Seed EIS (SEIS)

 

Individuals looking to invest and support early stage growth companies in the UK should take a close look at a recent UK Government initiative designed to incentivise such high risk investment. Think of Seed EIS as a tax incentive to invest in a company’s first funding round and which could be a prelude to a later, larger funding round where EIS tax relief would be available.

The key terms are summarised from HMRC’s website below:-
Seed Enterprise Investment Scheme (SEIS) – relief effective on or after 6 April 2012. For the first year of the new scheme, the Government will offer a capital gains tax (CGT) holiday – gains realised on the disposal of assets in 2012-13 that are invested through SEIS in the same year will be exempt from CGT.

  • applies to smaller companies, those with 25 or fewer employees and assets of up to £200,000, which are carrying on or preparing to carry on a new business;
  • give income tax relief worth 50 per cent of the amount invested to individual investors with a stake of less than 30 per cent in such companies, including directors who invest in their companies;
  • apply to subscriptions for shares, using the same definition of eligible shares as EIS (which it is proposed will be widened in Finance Bill 2012);
  • apply to an annual amount of investment of £100,000 per investor, with unused annual amounts able to be carried back to the previous year, as under EIS;
  • provide for relief within an overall tax favoured investment limit of £150,000 for the company. To give the greatest degree of flexibility, this will be a cumulative limit, not an annual limit;
  • provide for an exemption from CGT on gains on shares within the scope of the SEIS; and,
  • provide for an exemption from CGT on gains realised from disposals of assets in 2012-13, where the gains are reinvested through the new SEIS in the same year.

If you have any questions, please contact HMRC on 020 7147 2589 (email: This email address is being protected from spambots. You need JavaScript enabled to view it. ) or Des Ryan on 020 7147 0818 (email: This email address is being protected from spambots. You need JavaScript enabled to view it. ).