Seed Enterprise Investment Scheme

Seed Enterprise Investment Scheme

The autumn statement heralded a big shake up of tax incentives for investors who are bank-rolling small businesses.

Enterprise Investment Schemes and Venture Capital Trusts are all due for a revamp in the next tax year – and April 6, 2012, will also see their little cousin, the Seed Enterprise Investment Scheme (SEIS) being launched.

For investors keen to see what a SEIS has to offer, here are some of the important points to consider:

  • SEIS investors can input £100,000 in a single tax year which can be spread over a number of companies. Any one company can raise no more than £150,000 in total via SEIS investment.
  • Investors cannot control the company receiving their capital and have more than a 30% stake in the company in which they invest
  • Investors can receive up to 50% tax relief in the tax year the investment is made, regardless of their marginal rate
  • The business company must be a UK company and have a permanent establishment in the UK
  • In the 2012-13 tax year, tax payers can roll a chargeable gain on the disposal of assets in the tax year in to shares qualifying for SEIS income tax relief, with a full capital gains tax exemption.
  • The company must have fewer than 25 employees. If the company is the parent company of a group, that figure applies to the whole group.
  • The company’s trade must be no more than two years old.
  • The company must have assets of less than £200,000
  • The company has to trade in an approved sector – generally not in finance or investment, for example, a property company cannot raise capital as a SEIS.