Enterprise Investment Scheme

Enterprise Investment Schemes

Enterprise Investment Schemes (EIS) aren’t new; they’ve been around a while and are pretty tax efficient. But the new Seed Enterprise Investment Scheme (SEIS), designed to encourage investment in small businesses, kicks-ass!

Tax Savings

Income Tax:
Investing into qualifying SEIS shares means you can claim 50% income tax relief. For example, if you invest £20,000, you’ll get £10,000 off your income tax bill.
Capital Gains Tax:
Ordinarily when you buy shares, sell them at a later date and then make money on them, you have to pay Capital Gains Tax. When you sell SEIS shares, providing you’ve had them for more than 3 years, and claimed the income tax deduction, you won’t pay any Capital Gains Tax on the profit you make.

The main parts:

• SEIS investors can input £100,000 in a single tax year which can be spread over a number of companies.  Any one company can raise no more than £150,000 in total via SEIS investment.
• Investors cannot control the company receiving their capital and have 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
• The business company must be a UK company and have a permanent establishment in the UK
• The company must have fewer than 25 employees
• The company must have assets of less than £200,000
• The company has to trade in an approved sector – generally not in finance or investment, for example, a property company raise capital as a SEIS.

Get it right

This is a great time for those who may have spare funds they are willing to invest and have a tax bill to pay.
If you’re considering an SEIS investment, speak to us. It’s important you get the details right in order to get the tax reduction.