Discover SEIS, short for “Seed Enterprise Investment Scheme.” 🌱
The UK government introduced the SEIS as a tax-advantaged initiative to inspire investments in emerging start-ups. Its purpose is to promote economic growth by providing tax benefits to individual investors who actively support small, early-stage companies.
Furthermore, the government has confirmed recent changes in the limits available to UK-based investors and companies wishing to raise investment through the SEIS.
Investors can enjoy a fantastic upside in this scheme. They receive an immediate income tax relief of 50% on the value of the purchase of SEIS-approved shares and can also benefit from tax-free gains when they sell the same shares, provided they meet the conditions at the point of sale.
Several conditions must be met by a company issuing the SEIS shares to an investor:
- Must have gross assets below £350,000.
- Must have less than 25 full-time employees
- The company must be carrying out development or a qualifying trade that carries with it a significant degree of risk.
- Must be a standalone UK company or parent, cannot be a subsidiary.
- Must not have already received any benefits under the EIS or VCT schemes.
To qualify for SEIS shares, a company must invest the consideration they receive in their trade or development activity. Companies are limited to raising a maximum of £250,000 through SEIS, and they must apply to raise funds through the scheme within the first 2 years of commencing trading.
