Seed Enterprise Investment Scheme

Chancellor George Osborne’s autumn statement heralded a big shake up of tax incentives for investors bank rolling small businesses.

Enterprise Investment Schemes and Venture Capital Trusts are all due for a revamp in the next tax year – and April 6, 2012, will also see their little cousin, the Seed Enterprise Investment Scheme (SEIS) being launched.

For investors keen to see what a SEIS has to offer, here are some of the important points to consider:

  • SEIS investors can input £100,000 in a single tax year rising to a maximum £150,000 over two or more tax years in to a single company
  • Investors cannot control, the company receiving their capital
  • Investors pick up 50% tax relief in the tax year the investment is made, regardless of their marginal rate
  • The business must be a UK company
  • In the 2012-13 tax year, tax payers can roll any chargeable gain in the tax year in to a SEIS with a full capital gains tax exemption
  • The company must not employ more than 25 workers
  • The company must be a start up business
  • The company must have assets of less than £200,000
  • The company has to trade in an approved sector – generally not in finance or investment, for example, a property company raise capital as a SEIS.

The aim behind a SEIS, say the Chancellor, is to stimulate entrepreneurship and kick start the economy.