Seed Enterprise Investment Scheme (SEIS)
The Seed Enterprise Investment Scheme (SEIS) is designed to increase the level of investment 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 SEIS applies to shares issued on or after 6 April 2012 and will continue to offer Income Tax relief until at least 2017. Capital gains reinvestment relief was originally only available for 2012-13 but has been extended to 2013-14 at half the rate (£50,000).
The scheme provides Income Tax relief worth 50% of the amount invested to qualifying individual investors on a maximum annual investment of £100,000. This kind of tax relief is making the scheme very popular but investors should consider the importance of picking a good company to invest in and undertaking thorough 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. HMRC have recently published revised guidance for companies interested in using the scheme.