Seed Enterprise Investment Scheme: how will it work?

The Seed Enterprise Investment Scheme, it is hoped, will provide an alternative to bank lending for higher-risk startup companies. The Seed Enterprise Investment Scheme will be available from April 6, 2012, and will run alongside the existing Enterprise Investment Scheme, but will be targeted at startup companies.

The main features of the Seed Enterprise Investment Scheme are:

  • Income tax relief of 50 per cent of the investment will be available to individuals who invest in qualifying companies, irrespective of their marginal rate of tax
  • An annual investment limit of ?100,000 per individual will apply
  • A cumulative investment limit of ?150,000 per company will apply
  • Gains arising on the disposal of other assets in 2012/13 will attract a capital gains tax exemption if they are reinvested through the SEIS in the same year

The Seed Enterprise Investment Scheme will be welcomed by startups and investors alike ? and comes alongside simplifications being made to the existing rules for the Enterprise Investment Scheme and Venture Capital Trusts.

Commenting on the Seed Enterprise Investment Scheme, Bill Dodwell, head of tax policy at Deloitte, says: ?The enhanced rate of relief reflects the inherently risky nature of small startup companies and has been estimated to cost the Exchequer ?50m in the first year and lower amounts in later years, when the capital gains relief drops away.  

“Tax relief at up to 78 per cent in the first year will make SEIS an attractive option for individuals who wish to invest in startup companies. It’s unlikely that the rules will allow investment in a connected company, so that investors will not be able to invest in a company they control.? 

Picture source

Share this story

0 0 vote
Article Rating
Notify of
Inline Feedbacks
View all comments
Would love your thoughts, please comment.x
Send this to a friend