The Seed Enterprise Investment Scheme (SEIS) is aimed at attracting venture capitalists to inject cash into start-up businesses and in return they receive tax incentives.
Chancellor George Osborne set up SEIS in April 2012.
Since then, more than 3,000 start-ups have raised more than £250 million in investment under SEIS.
What were the SEIS changes in Budget 2016?
Very little. The Chancellor had already announced energy saving schemes would be excluded from SEIS from April 6, 2016, and this avenue of investment for such companies is now closed.
The Treasury has warned some new legalisation under European Union state-aid rules may be on the way, but this is expected to leave SEIS largely intact and to have more of an impact on the Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCTs)
Have the tax incentives changed?
No – SEIS has three main tax incentives and these remain the same –
- 50% refund on income tax paid based on the amount invested up to a maximum of £100,000 in a tax year.
For example, investing £60,000 in SEIS gives a £30,000 refund on income tax paid.
- No capital gains tax on the increase in value of SEIS shares
- Loss relief if the start-up fails
The tax reliefs are only available if the SEIS shares are held for a minimum of 36 months, otherwise HMRC can claw them back.
If I invested in a SEIS last year, can I invest more this year?
Yes, investors have an annual £100,000 SEIS allowance each year, but each SEIS company can only accept a maximum of £150,000 under the scheme.
Can I invest through a company or trust?
No, SIES investment is personal to individuals
I’m an expat – do I still get SEIS tax incentives?
The rules say the investor need not be resident or ordinarily resident in the UK, but does have to pay tax in the UK
Restrictions on SEIS investment
Some rules stop investment if the investor or their associates have an interest of more than 30% in the SEIS company or if the investor or an associate is employed by the company. The rules say nothing about business relationships with SEIS company directors.
Read more about SEIS investment on the HM Revenue and Customs web site
