The Chancellor announced the Seed Enterprise Investment Scheme (SEIS) in the last Autumn Statement. Its purpose is to encourage investment in ‘small’, UK, trading companies that are under two years old. ‘Small’ is defined as having 25 or less employees and gross assets of under £200,000.
The Scheme works by offering private investors tax relief of up to 50% on investments up to a maximum of £100,000 per annum, and there are also some capital gains tax concessions. The company is restricted to obtaining only £150,000 of investment via the Scheme.
The investment is made in exchange for shares that must be held for at least three years; otherwise there is a claw-back of the tax relief. The investor cannot be an employee of the company, unless they are a director. Furthermore, they cannot have an interest of more than 30% in the company.
SEIS may be right for you, but please note that the investors will be shareholders so you ought to think carefully about the impact on your degree of control of the company and your share of the dividends.
Your local TaxAssist Accountant would be happy to discuss this with you in more detail.