Seed Enterprise Investment Schemes (SEIS)
The Seed Enterprise Investment Scheme (SEIS) is a tax relief scheme introduced by the government in 2012. It’s designed to encourage investment in younger companies like startups.
Shares are offered to individual investors and a maximum of £150,000 can be raised using this scheme.
What are SEIS Investments
For investors, the SEIS tax reliefs are greater than the Enterprise Investment Scheme (EIS). An SEIS investor can claim back up to 50% of the investment through income tax relief. However, it’s important to bear in mind that the tax reliefs are greater because it’s much riskier to invest in a seed-stage start-up.
Tax relief for Investors
The tax reliefs for SEIS investors are:
Income tax relief of up to 50% of the sum invested.
Capital gains tax relief.
Inheritance tax relief.
The SEIS limits
You can invest up to £100,000 each tax year and spread this across a number of companies.
You can’t be the director of the company you’re investing in, only a shareholder.
You can’t hold more than a 30% stake in the company you’re investing indifference.
Capital at risk
Typically, opportunities available in the real world are intended to be viewed by self-certified high net worth or sophisticated investors.
Investing in early-stage businesses is itself a risky business. There is a good chance that you could lose all or some of the money that you invest. You should therefore not invest more money than you can afford to lose without your quality of life being impaired as a result.