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Son of EIS

26th March 2012

The EIS (Enterprise Investment Scheme) has had a baby!  Seriously, though, SEIS doesn’t stand for “Son of EIS” but for Seed Enterprise Investment Scheme.

You may remember that EIS provides a very tax-efficient way for private individuals to invest in small companies, giving various income and capital gains tax reliefs to anyone subscribing for certain shares.  The new SEIS scheme, which applies to the very smallest companies (fewer than 25 employees, less than £200,000 in gross assets) is even more generous.  SEIS is limited to £150,000 for any company, and to £100,000 per annum for any investor.  However, it does give:

  • Tax relief at up to 50%, depending on the taxpayer’s overall liability;
  • CGT exemption on the shares themselves – provided they are held for at least three years; and
  • As a special, one-off for the current tax year (2012/13) only, exemption from CGT for any gains (on any kind of assets) arising in 2012/13 which are reinvested and where SEIS relief is claimed.

Given that the CGT rate could be 28%, it is possible to achieve tax relief of 78% overall.  That means you could, if the circumstances allowed, acquire an investment into which you have injected, say, £50,000 for an outlay of only £11,000.

If you are thinking of making an investment – or if you are thinking of raising funds for your business – this is an opportunity you might want to consider very seriously.  And pretty quickly, too!

If you’d like to know more, e-mail me using simon@richardsons-group.co.uk or call me on 01844 261155.