Start-Up Investment with Tax Relief Incentives

The Seed Enterprise Investment Scheme (SEIS) is a UK government scheme that allows tax reliefs (Income and Capital Gains Tax) for investors who subscribe for eligible shares in qualifying service and manufacturing sectors in new companies. SEIS is designed to provide to provide much needed seed capital to start-up companies and an incentive to investors to invest in shares in small, early stage and unquoted companies.

SEIS Summary

  • The maximum level of investment qualifying for income tax relief is £100,000 per investor per annum in one or more qualifying companies. As a result, up to £50,000 tax relief can be claimed by the investor, providing they have sufficient taxable income to allow the full SEIS relief, and makes no other SEIS investment in the tax year.
  • Investors cannot have more than 30% shares nor control the company receiving their capital
  • SEIS relief is not available to employees of the company at any time during the period from date of issue of the shares to the third anniversary of that date. This clause excludes Directors of the company.
  • A SEIS investor typically makes their SEIS investment decision to invest the based on the people involved and their belief in the idea or product and future growth prospects.
  • Certain types of companies do not qualify for SEIS – such as dealing in land, property development, farming, money lending, etc.

Benefits to SEIS Investors

  • 50% Income Tax relief against personal income tax in the tax year the investment is made
  • 28% Capital Gains Tax relief on qualifying investments of up to £100,000 on any asset sold provided the proceeds are reinvested in a SEIS start up in the same year
  • The combined effect of the Capital Gains Tax exemption and the Income Tax break offers relief of 78% on investment via SEIS
  • No Capital Gains Tax on gains realised on the disposal of the investment more than three years after the Company begins to trade
  • 100% relief from inheritance tax relief for investments held for more than two years, or immediately if the investment qualifies as replacement property.
  • Ability for UK resident non-UK domiciled persons to make an investment using foreign income and gains without incurring UK remittance tax.
  • Ability to offset any capital losses realised against income or gains, significantly reducing the capital at risk.

Seedrs is a leading crowd-funding platform regulated by the Financial Conduct Authority (FCA) and a prominent advocate of SEIS. Listed on their website is a wide selection of eligible investment opportunities. Investing always involves an element of risk and should be considered only as part of a diverse portfolio. Seedrs is targeted towards investors who fully comprehend the risks associated with investing prior to making investment decisions.

If your new venture requires investment, MIERA Consulting has extensive experience of start-up companies and can help, not only with raising funds, but with SWOT analysis, mentoring and a wealth of business start-up advice.