Is the Seed Enterprise Investment Scheme (SEIS) right for you?

 

SEIS

Since the Labour Party’s general election victory, the Seed Enterprise Investment Scheme (SEIS) has experienced a surge in investor interest. Data from Wealth Club shows that SEIS investments between July and August were nearly three times higher than the same period last year, and the number of investors also tripled. This increase is a significant boost for early-stage UK businesses, especially as investors look for tax-efficient options amidst potential upcoming tax changes. 

Why the SEIS Surge? 

SEIS is particularly attractive due to its generous tax reliefs. Investors can receive up to 50% income tax relief on investments, with 50% capital gains tax (CGT) relief, meaning that the net cost of investment could be less than half of subscription price. Furthermore, any gains realised through SEIS investments are tax-free, making it one of the most efficient investment vehicles available for higher-rate taxpayers concerned about potential CGT increases. Loss relief may also be available for SEIS investments that do not work out – saving tax on a disposal. 

SEIS relief does not come without its risks though; the company must remain SEIS qualifying for 3 years, which is outside the investors control, otherwise all tax reliefs are withdrawn from the investor. Start-ups are also naturally high-risk investments, and financial advice may need to be sourced independently before you decide to make any SEIS investment which could lead you to a financial loss even with the tax reliefs available.  

The Role of Plus Accounting 

At Plus Accounting, we recognise the unique benefits that SEIS can offer to investors and entrepreneurs alike: 

For Investors: 

We can guide you through the application process to maximise your tax reliefs, ensuring your SEIS investments are structured correctly and efficiently and maximise the tax reliefs available. Our expertise in corporate tax also ensures that you are fully informed of the risks and potential rewards associated with SEIS. 

For Entrepreneurs: 

If you’re a business looking to raise capital through SEIS, we can help you with the qualifying criteria and registration process. We work closely with businesses to ensure they meet the HMRC requirements, providing a smooth path to securing investment. 

Considerations for SEIS Investors and Entrepreneurs 

With the extension of the EIS/VCT schemes until 2035, confirmed by the Treasury, there’s now greater certainty around the future of SEIS. This provides investors with confidence to continue leveraging SEIS for tax-efficient investments while supporting the next wave of UK entrepreneurs.  

We’re here to help you make the most of SEIS—whether you’re seeking to invest or to raise funds. Contact us today to find out how we can assist you in navigating this exciting opportunity. 

Author: Mason King, Senior Corporate Tax Manager

Contact Mason here

Any views or opinions represented in this blog are personal, belong solely to the blog owner, and do not represent those of Plus Accounting. All content provided on this blog is for informational purposes only. The owner of this blog makes no representations as to the accuracy or completeness of any information on this site or found by following any link on this site. Please note that AI has been utilised in generating content for this blog.

Date published: 16 September 2024

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