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January 2012

Seed Enterprise Investment Scheme

The Government has released more information on the new Seed Enterprise Investment Scheme (SEIS) aimed at smaller companies.

The proposals include the following:

  • the relief will initially run from 6 April 2012 until 5 April 2017 but may continue after that date
  • income tax relief on a qualifying investment will be 50%.  The relief is available to set against any income tax liability that is due, whether at basic, higher or additional rate
  • income tax relief will be withdrawn in certain circumstances including a disposal of the shares within three years
  • there will be an annual limit of £100,000 investment by an individual
  • a director may make a qualifying investment but not an employee or an associate of an employee
  • an individual may not hold more than 30% of the shares in the company
  • the issuing company must have been incorporated within two years of the date on which the qualifying shares are issued
  • the company must exist to carry on a qualifying trade
  • the gross assets of the company (including a proportion of assets of companies which hold at least 25% of the shares in the issuing company) must not exceed £200,000 immediately before the shares are issued
  • the issuing company must not have more than the equivalent of 25 full-time employees immediately before the shares are issued
  • the maximum amount which can be raised by a company through SEIS is £150,000 and this is an overall total not an annual limit
  • subject to conditions, the disposal of SEIS shares will be exempt from CGT
  • where an individual makes a capital gain in 2012/13 and invests an amount which is at least equal to the gain in qualifying SEIS shares before 6 April 2013 then the gain will be exempt from CGT.  If the shares fail to meet the qualifications for SEIS for three years then the exemption will be withdrawn

If you are interested in this new relief and would like to see if it is relevant to you or your business then please contact us.