SEIS - Seed Enterprise Investment Scheme
Following the success of the EIS, in 2012 the government introduced the SEIS in order to encourage investors to finance start-ups by providing more generous tax breaks for backing projects which may otherwise be viewed as too risky. The SEIS and EIS schemes are very similar but also have some very crucial differences. It is designed for investing into even smaller companies, offering even larger tax breaks in return. Whereas the Enterprise Investment scheme offers 30% tax relief, The SEIS is an incredibly generous derivative of the Enterprise Investment Scheme (EIS). Its aim is to encourage seed investment in early stage companies. Investors, including directors, can receive initial tax relief of 50% on investments up to £100,000 and Capital Gains Tax (CGT) exemption for any gains on the SEIS shares.The maximum amount to be raised for SEIS approved companies is £150,000 before it moves on to EIS.
To receive investment under the SEIS banner, a business must be relatively new, 2 years old or less, have less than 50 employees and under £200,000 in gross assets. Like the Enterprise Investment Scheme (EIS), there is high risk however, with the ample tax breaks on offer, the potential for large returns can be appealing to some.