The Seed Enterprise Investment Scheme (SEIS) is specifically designed for young companies to raise relatively small amounts of start-up capital. The investors receive 50% income tax relief on the amount they subscribe for new shares, and those shares are exempt from capital gains tax (CGT) when they are sold after three years or more.
There is no minimum amount the company may raise, and no minimum each equity investor is required to commit, but there are maximum limits. The company is permitted to raise up to £150,000 over a three-year period, and the maximum SEIS investment per taxpayer is capped at £100,000 per tax year.
Companies which use SEIS tend to be risky ventures. Investors who subscribe for SEIS shares balance the chance that they will lose their money, with the possibility of making tax-free gains when the company is a success, and they can sell their shares at a large profit.
If you have made an SEIS investment, however small, you should claim the income tax relief due. Don’t miss out this step, as when you sell your shares you must show that you have claimed the income tax relief in order to benefit from the CGT exemption.
