EIS and SEIS Tax Reliefs
To stimulate and support entrepreneurship, Her Majesty’s Revenue and Customs (HMRC) offers two tax incentive schemes for UK taxpayers who invest in qualifying early-stage and growth-focused businesses that are permanently established within the UK. Please note that investors who are not UK taxpayers are unable to take advantage of these schemes and the schemes are subject to change.
The first scheme, the Enterprise Investment Scheme (EIS), is designed to encourage investment in qualifying early-stage growth-focused companies by providing investors with up to 30% of their investment back in income tax relief. Plus investors can defer up to 50% Capital Gains Tax until after the EIS investment matures. Loss relief can also be set against an investor’s Capital Gains Tax or income tax in the year of disposal or the previous year.
The second scheme, the Seed Enterprise Investment Scheme (SEIS), aims to encourage investment in qualifying new seed-stage companies by providing individuals with income tax relief at a rate of 50% on the value of the investment, with a maximum of £100,000 of the investments per tax year. In addition to this, investors can also benefit from up to 50% Capital Gains Tax relief (up to a maximum of £50,000) on gains which are reinvested in EIS eligible shares. Any gain arising on the disposal of the shares may also be exempt from Capital Gains Tax if the shares are held for three years, and loss relief is also accessible if the investment fails. If an investor makes a loss on disposal of SEIS shares at any time the loss can be offset against an investor’s chargeable gains.
UK taxpayers should note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. To learn more about how SEIS or EIS works, please read the online HMRC guidance or contact your professional tax advisor.
These schemes provide great incentives for UK taxpayers who are either active investors or are just looking to support their friends and family in their entrepreneurial projects. Many Seedrs campaigns are looking to raise investment under one of these schemes and are identified as eligible with a small SEIS or EIS logo. Seedrs offers a simple and straightforward way to invest in a wide range of SEIS and EIS eligible companies.