The Seed Enterprise Investment Scheme (SEIS)

The Seed Enterprise Investment Scheme (SEIS)

Introduced in April 2012 by HMRC, the Seed Enterprise Investment Scheme (SEIS) was designed to help small, early-stage companies raise finance through individual investors who buy new shares in a company, by providing a series of tax reliefs on investments made into SEIS qualifying companies.

The SEIS allows investors to claim relief on up to £100,000 in a single tax year which can be spread over a number of companies. A company can raise no more than £150,000 in total via SEIS investment. SEIS companies can be invested in directly or through an SEIS fund. If you are looking to invest more than £100,00 in an early-stage company, you may wish to visit our Enterprise Investment Scheme (EIS) page on the platform.

The reliefs available through the SEIS are detailed further below. To find out more information please visit the HMRC website.

What are the benefits of SEIS tax relief?

Income Tax Relief

Offers investors 50% income tax relief of the total amount invested in an SEIS opportunity.

Reinvestment Relief

Profits realised within three years are exempt from Capital Gains if reinvested in SEIS.

Tax Disposal Relief

Investors have no Capital Gains Tax (CGT) to pay on any SEIS gains after three years.

Loss Relief

Loss relief if the company fails, even if this is within the three-year hold period.

What are the
available SEIS tax reliefs?

Income Tax Relief

An individual can reduce their Income Tax liability by up to 50% of the amount invested in qualifying SEIS shares. For example, if you make an investment of £100,000, you can save £50,000 in income tax.

For more information, please visit the HMRC website.

SEIS Capital Gains Tax Reinvestment Relief

If you choose to reinvest gains from other non-SEIS investments into an SEIS eligible company, you will receive 50% Capital Gains Tax relief on the original investments. For example, if a prior investment has given you a gain of £20,000, all of which you decide to reinvest in an SEIS eligible company, 50% of that £20,000 gain will be exempt from Capital Gains Tax.

For more information, please visit the HMRC website.

SEIS Capital Gains Tax Disposal Relief

If you sell your shares after having held them for at least 3 years, then you may be able to pay no Capital Gains Tax on your investment gains, depending on your individual circumstances. For example, if your investment value triples over 3 years, and your shares initially worth £20,000 are now worth £60,000, you will not need to pay capital gains tax on the £40,000 gain if you decide to sell your shares. However, please note, the investment value can also decrease over time. Additionally, the shares can be held for a much longer period, thus providing the potential for any CGT free gain to accrue over a longer period.

For more information, please visit the HMRC website.

SEIS Loss Relief

If an SEIS investment performs poorly and you lose money on your SEIS investment, you may be able to claim SEIS loss relief.

The loss relief you can claim is at the equivalent rate to the highest rate of income tax you pay. For example, if the rate of income tax you pay is 45%, you can claim up to 45% of your net loss in income tax relief. Alternatively, the losses can be carried forward and offset against future capital gains at the prevailing rate.

For more information, please visit the HMRC website.

SEIS Inheritance Tax Relief

There will no longer be any inheritance tax on the value of shares that have been held for two years.

For more information, please visit the HMRC website.

Carry Back (applying SEIS tax relief to a previous year)

You can carry back your SEIS tax relief to the previous tax year. An investor may choose to have part or all of an issue of shares treated as though acquired in the tax year preceding that in which the shares were actually acquired. This is subject to the maximum annual investment limit for that earlier year (£100,000). You could also potentially get back tax you’ve already paid as carry back gives you the option to offset the tax relief against the previous year’s tax bill.

For more information, please visit the HMRC website.

Finding EIS and SEIS investment opportunities
on the Regionally Platform

Explore EIS and SEIS eligible companies currently fundraising on the Regionally platform.

Remember, your capital is at risk when investing. Please see Regionally’s Risk Warning and Website Disclaimer for more information.

**IMPORTANT** The above information is only meant to be a simple summary. This information should not be relied upon when investing into a company on the Regionally platform. There are a number of criteria that investors and companies need to meet in order to qualify for tax reliefs. Professional advice should be taken.

For more information, please visit the HMRC website.