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WHAT IS SEIS?
The Seed Enterprise Investment Scheme (often referred to as SEIS or Seed EIS) was introduced in April 2012 by the HMRC.
Its aim is to help small early-stage companies raise funds through individual investors by providing very generous tax relief to investors who take risks on these very early stage ventures. It builds on the success of the Enterprise Investment Scheme (EIS) which was introduced in 1994 to help raise funds for small unquoted companies.
WHY WAS SEIS LAUNCHED?
The Seed Enterprise Investment Scheme has been created by the government to offer a partial solution to the lack of bank funding available to young companies, many of which have been seeking start-up finance over recent years. For this reason the scheme is extremely kind to investors and has helped to develop the crowdfunding industry.
THE TAX ADVANTAGES OF INVESTING IN SEIS COMPANIES
SEIS offers eligible investors the opportunity to claim back up to 50% of their investment in eligible companies through income tax relief (for investments of up to £100,000).
Investors will also not pay any capital gains tax (CGT) on the disposal of shares at a profit, and may be able to claim loss relief if the shares are disposed of at a loss.
To benefit from the SEIS, the HMRC imposes certain conditions in order to prevent tax avoidance. These include a requirement that investors hold the shares for at least three years and a requirement that Unquoted Limited not engage in a list of prohibited trades, among others. More information on the conditions for claiming SEIS relief can be found on the www.gov.uk website.