The Seed Enterprise Investment Scheme (SEIS) and Enterprise Investment Scheme (EIS) are tax incentive schemes designed to help small, early-stage companies raise funds from individual investors (or from EIS funds who manage investments on behalf of groups of individual investors) by providing tax reliefs on the investment in company shares. SEIS is for very early stage companies (with slightly more generous tax reliefs) and EIS is for slightly larger companies. These are the main reliefs:
- Tax reliefs for SEIS:
- Income tax relief of 50% of the amount invested (up to an annual investment limit of £100,000);
- exemption from capital gains tax (CGT) on the disposal of the shares;
- Tax reliefs for EIS:
- income tax relief of 30% of the amount invested, (up to an annual investmentlimit of £1M (£2M if the next £1M is invested in ‘knowledge intensive’ companies));
- exemption from CGT on the disposal of the shares;
There are also reliefs for deferring capital gains on other assets (where the proceeds are reinvested in S/EIS shares) and income tax relief if the company fails.
The shares need to be held for at least 3 years to benefit from most of the reliefs.
We have more FAQs on SEIS/EIS and other topics to help your business available here.