The Government has introduced a new Seed EIS (SEIS) scheme for shares issued after 5 April 2012 to encourage investment into early stage businesses.
In order to qualify for the relief a company must be undertaking or planning to undertake a new business (less than two years old at the date of share issue). The company or group must also have fewer than 25 full-time employees and gross assets of less than £200,000 at the time of the SEIS investment.
Qualifying companies will be able to raise up to £150,000 under the scheme in any three-year period, and funds raised must be used within three years. Once 70% of the funds have been used, the company may raise funds under EIS or from VCTs.
The maximum that an individual can invest under SEIS is £100,000 per tax year.
The benefits of the scheme for investors include:
- upfront income tax relief of 50% for subscriptions of shares by investors (which can include directors) of up to £100,000 per tax year
- no capital gains tax payable on the disposal of SEIS shares which have been held for more than three years
- an exemption from capital gains tax on gains realised from disposals of other assets made in the 2012/13 tax year, where the gains are reinvested through the new SEIS in the same tax year and the SEIS shares are held for the full three years.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
