Seed Enterprise Investment Scheme (SEIS)
Following close behind last week’s Autumn Statement by the Chancellor, the Government has today published draft legislation providing further details of the benefits and conditions of the proposed new "Seed Enterprise Investment Scheme" (SEIS).
View our e-briefing here which summarises the operation of the scheme and provides an insight into the tax savings offered by an investment into a qualifying start-up.
However, the following is a brief summary of the key elements of the scheme:
- Individuals will benefit from an income tax saving of 50% of amounts invested (up to a maximum of £100,000 per tax year) – regardless of their marginal rate of income tax.
- Capital gains realised on a disposal of a qualifying SEIS investment will be exempt from tax.
- Investors will also benefit from an exemption from tax on disposals of capital assets made within the tax year 2012/2013 where proceeds are re-invested in a qualifying SEIS company in the same year.
- Companies will be able to raise a maximum of £150,000 under the SEIS regime (a total limit, not annual).
- Companies may be either trading or undertaking preparatory work to trading, but will need to use SEIS monies raised in such activities within three years.
- Companies will need to have gross assets of £200,000 or less and fewer than 25 full-time employees at the time of the investment.
- Companies will be able to raise EIS and VCT monies after a SEIS funding round, but only once 75% of any SEIS monies have been spent in their qualifying activities. No SEIS relief will be available if any EIS or VCT monies have previously been raised.
In addition, the legislation confirms a number of changes already announced to the existing Enterprise Investment Scheme (EIS) and Venture Capital Trust (VCT) regimes, and we will be issuing a further e-briefing discussing these changes shortly.
Lawyers Robert Young, Peter Jackson, James Meakin
