Budget 2014 – 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. The Chancellor announced as part of the Budget measures that the scheme is to be made permanent.
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 will also offer a 50% exemption from CGT on gains within the scope of the SEIS. This measure had been due to expire but will now be made permanent.
The availability of both Income Tax and Capital Gains Tax relief makes the scheme very popular but investors must 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.