SEIS relief

SEIS

SEIS is often a requirement for investors as they will receive upto 50% tax relief on their investment.

Key requirements:

  • company may raise no more than £150,000 in total under SEIS (cumulative limit, not annual) .

  • full time equivalent number of employees must be less than 25.

  • immediately before the shares are issued, the total value of the company’s assets must not exceed £200,000.

  • company must not have been trading more than two years before the shares are issued (so could have been incorporated more than 2 years if started to trade later).

  • issuing company itself must carry on the new qualifying trade and any preparation work or R&D leading to it.

Shares issued do not qualify if:

  • they’re not subscribed for wholly in cash upon issue .

  • the investor disposes them before termination date – so needs hold 3 years .

  • the shares carry any present/future preferential rights:

  • to assets on winding up;

  • to be redeemed;

  • to cumulative dividends ;

  • to dividends for which the amount and timing depend on a decision of the company or any other person.

Investors (or their associates) cannot:

  • be employees prior to share issue, unless they are also a director.

  • hold more than 30 per cent.

  • have loans from the company which are linked to their share subscription.

  • subscribe as part of a tax avoidance arrangement, must have genuine commercial reasons.

  • subscribe for the shares as part of a wider arrangement which includes somebody else subscribing for shares in a company in which the investor – or anyone else party to the arrangement – has a substantial interest.