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Budget 2013 - Seed Enterprise Investment Scheme (SEIS)

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20 March 2013

SEIS is aimed at helping small early-stage companies looking to raise equity finance.  As well as a range of tax reliefs which are similar to EIS tax breaks, SEIS also offers investors the chance to relieve capital gains by reinvesting the proceeds into SEIS investment.  The amount reinvested was exempt from Capital Gains Tax (CGT). This was originally just for the 2012/13 tax year and was limited to £100,000 of investment ie the same limit as that for income tax relief.  This CGT relief is now to be extended to 2013/14 for gains reinvested in SEIS shares in 2013/14 or the following year.  However, only gains up to £50,000 can be so relieved.

There was a funny quirk with the fine print of the SEIS legislation whereby new companies formed by company formation agents would not qualify for the relief as they were under the control of another company.  This is now being rectified for companies formed from 6 April 2013.  The control test will not apply if there is only one subscriber share held by a parent company and this is transferred before the SEIS company starts to trade or begins preparation for its trade.

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