SEIS - SEED ENTERPRISE INVESTMENT SCHEME.
An exciting new scheme to be introduced from 6 April 2012 offers angel investors tax free returns whilst reducing the downside risk of investing in fledgling companies.
A company can raise up to £150,000 in exchange for Ordinary Shares.
A UK taxpayer, who may be a director but not otherwise an employee of the company, can benefit from:
A credit of 50% of their investment against their income tax liability, whatever their tax rate, up to £50,000 per year
Carry back of income tax credit to the previous year if required
Tax free rollover of capital gains from a previous investment (in 2012/13)
Receiving up to 30% of the company's shares.
The taxpayer may therefore benefit from up to £78,000 of tax credits to set against a £100,000 investment (£50,000 of income tax plus £28,000 of capital gains)
The company has to meet a number of conditions. It must:
Be embarking on a new activity (including Research and Development R&D) after the investment.
Be less than 2 years old
Have assets less than £200,000 before the investment
Have fewer than 26 employees.
Be raising no more than £150,000 through issue of shares. Loans are not affected.
The taxpayer/investor can only claim their tax credit:
Once 70% of their investment has been spent
With a compliance certificate issued by the company
The maximum a company can raise through SEIS is £150,000 but it is not precluded from subsequently seeking funds under the EIS (Enterprise Investment Scheme)
© 2012 Synapse Ltd