The Seed Enterprise Investment Scheme (SEIS) is a government scheme that offers investors extremely generous income tax and capital gains tax breaks on their investment in your start-up.

What are the main benefits?

  • The investor receives an income tax saving of 50% in the size of the investment. For example investors spending £100,000 will receive a reduction in their income tax bill of £50,000.
  • There is no capital gains tax to pay when the investor sell their shares, which can be up to 28%.

What are the conditions for the scheme?

  • Your company must be less than two years old.
  • Your company must be considered ‘small’ by HMRC.
  • Your company can receive no more than £150,000 in SEIS investment.
  • The investor must hold the shares for three years in order to obtain the full tax reliefs.

If you are looking for investment in your start-up, investors are most likely to expect you to be SEIS registered. It is the most cost effective form of investment available in the UK at the moment. Investors spending £100,000 will receive £50,000 back initially in the form of a reduced income tax bill. In the event that your start-up fails and the investor does not receive any of their investment back, they will have a capital loss of 28% of the net investment proceeds (£50,000). So, in a worst case scenario, an investor spending £100,000 will receive back a total of £64,000 even if your start-up doesn’t succeed.

If your company is profitable the investor will not pay income tax on profits (dividends) or capital gains tax when the shares are eventually sold.

Our guest post on the Seed Enterprise Investment Scheme published by Venture Capital firm EC1 Capital can be found here.

We have a dedicated team of professionals ready to assess your eligibility for SEIS. Please contact us for further information.