The Seed Enterprise Investment Scheme (SEIS) was introduced in 2012 to encourage investment in small businesses and start-ups. The scheme provides tax incentives to investors, and upon introduction was hailed as a key driver of entrepreneurship and small business growth; however, figures say that 40% of business owners are still unaware it exists. If you’re interested in investing in seed businesses, or indeed you are one – it’s well worth knowing about the scheme’s benefits.


The Seed Enterprise Investment Scheme (SEIS) was designed to complement the existing Enterprise Investment Scheme, but is geared towards helping small and early-stage companies rather than high risk enterprises. It aims to help seed businesses raise equity finance and offers Income Tax Relief for those who subscribe for qualifying shares in companies that meet the SEIS requirements.

For investors

Under the SEIS scheme, investors have the opportunity to invest up to £100,000 each year into small businesses.

Tax relief is available at 50% of the cost of the shares, reducing investors’ tax liability in return for putting money into the start-up sector.

Exemption from Capital Gains Tax on the earnings from your shares so long as you have held them for a minimum of three years

You can also receive Capital Gains Relief of up to 50% of the profits if you sell within three years and reinvest the profit into SEIS companies.

To take advantage of the scheme, you don’t need to be a UK resident – but you do need to paying tax in the UK.

The scheme also includes loss relief in the event that the company fails. The amount you receive in loss relief is equal to your investment minus the 50% you received back multiplied by your tax rate

Investors may NOT control more than a 30% stake in any company invested in through SEIS.

For businesses

The SEIS scheme covers the first £150,000 of external investment in to a seed business.

To qualify, your company must be based in the UK, have traded for no more than two years, have fewer than 25 employees and net assets of less than £200,000.

Make sure you consider how much capital you need – especially if its more than the £150,000 cap. The EIS scheme may be better for you.

If any of the conditions needed for your business to qualify for the scheme fall short during that period, investors will be liable to have their relief withdrawn. It is well worth covenanting to protect its SEIS status to encourage potential investors.

For further information and how to list your company with SEIS, visit the SEIS website.


Miranda Wadham on 05/08/2015
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