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Looking for investment? tax incentives via government SEED Enterprise Investment Scheme (SEIS)

It can be challenging to start a new business. In order to help your business grow, you have to keep your eyes open for investment opportunities and make sure that you are making the most of the help available from HMRC.

Fortunately, there are a few options to help you attract investment. Following on from our last blog on Tax Incentives for Small Business Investors, this post explores SEED Enterprise Investment Scheme (SEIS) to help you know what it is, why you should look into it, and how to find out if your business qualifies.

What is it?

SEIS is a fantastic opportunity for you to get a tax-break on up to £150,000 worth of investment. If your business qualifies, your potential investors can benefit from 50% tax relief on their investment up to £100,000 in each tax year.

What are the perks?

 

For your business For your investors
–    Investment at a time when you need it, up to £150,000 in total

–    A longer-term option than a standard loan

–    A spring-board to other investment opportunities for when your business grows, such as the Enterprise Investment Scheme (EIS)

–    No need to be a UK resident

–    Initial income tax relief of 50% on investments up to £100,000 per tax year in qualifying shares issued on or after 6 April 2012

–    Capital Gains Relief of up to 50% of the profits if you sell within three years and reinvest the profit into SEIS companies

–    Exemption from Capital Gains Tax on the earnings from your shares so long as you have held them for a minimum of three years

–    Loss relief in the event that the company fails

 

Do you qualify for SEIS?

  • You must carry out a qualifying trade (see list 
  • Your company must be unquoted at the time of issue
  • You must have fewer than 25 employees
  • You must have no more than £200,000 in gross assets
  • You must be permanently established in the UK

What’s next?

In order to get started, it’s a good idea to get advance assurance from HMRC before your investors claim tax relief. Use the SEIS (AA) form on the gov.uk website. Start looking for potential investors, a good resource is here.

Contact us here at 2E Accountants if you want more detailed advice on the SEIS scheme, we’d be happy to talk to you.

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