Seed Enterprise Investment Scheme (SEIS)
The SEIS is designed to increase the level of investing in the early development of high growth potential businesses. The scheme is similar to the EIS but focuses on smaller, early stage companies carrying on, or preparing to carry on, a new business in a qualifying trade. It was announced as part of the 2014 Budget that the scheme is to be made available permanently.
The scheme provides Income Tax relief worth 50% of the amount invested to qualifying individual investors on a maximum annual investment of £100,000. The scheme also offers a 50% exemption from CGT on gains within the scope of the SEIS.
The availability of both Income Tax and Capital Gains Tax relief makes the scheme very popular but investors should consider the importance of picking a good company to invest in and carry out proper due diligence. There are a number of conditions which must be met in order to invest in the scheme. For example, the scheme can only be used to invest in small companies i.e. companies with gross assets of no more than £200,000 and with less than 25 employees.