Seed Enterprise Investment Scheme, also known as SEIS, offers great tax efficient benefits to individuals while also encouraging investing in small and early stage start-up businesses in the UK.
SEIS was designed to boost economic growth in the UK by promoting new enterprise and entrepreneurship.
SEIS was introduced in the Chancellor George Osborne’s 2011 Autumn Statement which heralded a big shake up of tax incentives for investors with the Enterprise Investment Schemes and Venture Capital Trusts also having a revamp
These are the opportunities the Seed Enterprise Investment Scheme creates for investors and for start-up businesses looking for finance.
Here are some of the important points:
- 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. That means if you invest £10,000, your tax bill can be reduced by £5,000.
- The business company must be a UK company and have a permanent establishment in the UK
- 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 can’t raise capital as a SEIS.
Please give us a call if you would like to discuss SEIS further.