Seed Enterprise Investment Scheme - SEIS
This is a new and very generous tax incentive scheme where it is possible to save £78 for every £100 invested or looking at it another way £22 would buy you £100 shares in a start-up company.
How does the scheme work?
• The scheme is effective from 6th April 2012.
• The maximum investment by an individual is £100,000 per annum.
• Income tax relief is given at 50% irrespective of the individual’s tax rate for the year.
• The individual cannot hold more than 30% shares in the company.
• The investment must be made in a start-up company with no more than 25 employees and assets less than £200,000.
• The companies must be trading companies and not investment companies.
• Under the scheme there is a capital gains tax holiday in the first year only (2012/2013). For example if a capital gain is realised, this gain will be exempt under the SEIS.
• If the individual holds shares in a SEIS for more than three years, any gain realised on the gains will be exempt from tax.
• Start-up companies can raise up to £150,000 under this scheme.
• The maximum investment by an individual is £100,000 per annum.
• Income tax relief is given at 50% irrespective of the individual’s tax rate for the year.
• The individual cannot hold more than 30% shares in the company.
• The investment must be made in a start-up company with no more than 25 employees and assets less than £200,000.
• The companies must be trading companies and not investment companies.
• Under the scheme there is a capital gains tax holiday in the first year only (2012/2013). For example if a capital gain is realised, this gain will be exempt under the SEIS.
• If the individual holds shares in a SEIS for more than three years, any gain realised on the gains will be exempt from tax.
• Start-up companies can raise up to £150,000 under this scheme.
Why?
The intention is to stimulate economic recovery by attracting additional business investment in new British start-ups. The intention is to attract funding to parts of the market that have been traditionally too risky for banks.
The intention is to stimulate economic recovery by attracting additional business investment in new British start-ups. The intention is to attract funding to parts of the market that have been traditionally too risky for banks.
Caution
It is recommended that you do extensive research before investing in such a scheme. Studies show that 50% of new businesses fail in the first year and 95% go out of business by the fifth year. An attractive tax break will not turn a bad investment into a good one.
It is recommended that you do extensive research before investing in such a scheme. Studies show that 50% of new businesses fail in the first year and 95% go out of business by the fifth year. An attractive tax break will not turn a bad investment into a good one.
