SEIS: an incentive for small business investment

The Seed Enterprise Investment Scheme (SEIS) came into force in the Finance Act 2012 and aims to encourage people to invest in early stage companies.

What sort of companies will qualify for investment?

There are a number of strict conditions which must be met but generally speaking investors can benefit from the 50 per cent tax saving, providing the company receiving the investment:

·         has 25 or fewer employees

·         has assets of no more than £200,000

·         is carrying on or preparing to carry on a new business

·         has not already received more than £150,000 investment under the scheme

The rules apply equally to directors wishing to invest in their own companies. However, an individual investor’s stake in a company must not exceed 30 per cent. 

Tax reliefs available

Investors are eligible for the 50 per cent tax break irrespective of their ordinary rate of income tax. In addition, a gain realised on the disposal of a SEIS investment can be exempt from capital gains tax if the shares are held for more than three years.

Professional support for SEIS investments

For many people who have been considering investment in a small business, the arrival of the SEIS might be the final motivation needed given the generous income tax relief available.

If you would like any further advice on SEIS and whether it's right for you, please contact a member of the taylorcocks team.