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)

 

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