The Seed Enterprise Investment Scheme (SEIS) was introduced in 2012 and its aim is to stimulate entrepreneurship and kick start the economy. The criteria of a SEIS varies from that above as they are focused on smaller, brand new companies which are higher risk and therefore the scheme offers higher tax relief as an incentive. As the companies receiving investments from a SEIS are less advanced than those that are EIS eligible, the restrictions are enhanced.

The core requirements surrounding a SEIS are as follows;

• SEIS investors can place a maximum of £100,000 in a single tax year, which can be spread over a number of companies.

• A company can raise no more than £150,000 in total via SEIS investment.

• Investors cannot control the company receiving their capital, and must not hold more than a 30% stake in the company in which they invest.

• Investors can receive up to 50% tax relief in the tax year the investment is made, regardless of their marginal rate.

• The company seeking investment must be based in the UK, and have a permanent establishment in the British Isles.

• The company must have fewer than 25 employees. If the company is the parent company of a group, that figure applies to the whole group.

• The company must be no more than two years old.

• The company must have assets of less than £200,000.

• The company has to trade in an approved sector such as medical research, technology or charity – generally not in finance or investment, for example, a property company can’t raise capital through SEIS.

​If you hold shares in a SEIS for more than 3 years, no Capital Gains tax would be payable. You would also reap the benefits of no inheritance tax after only 2 years of holding the shares, due to Business Property relief. Any loss on the value of shares within a SEIS can be offset against your income tax bill so there are plenty of different benefits to draw you in.

If you have an interest in investing in an EIS or SEIS, you’ll need to fully understand the risks involved, legibility and the benefits that would then be available to you. Our experienced, independent financial advisers are always on hand to discuss these options with you and whether they’re appropriate to your circumstances. Investing in smaller companies can provide high returns and gratification in boosting the economy but the risk involved should not be ignored.