The Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) provides tax incentives in the form of a variety of Income Tax and Capital Gains Tax (CGT) reliefs to investors who invest in smaller, unquoted, trading companies.
Under SEIS, a start-up may receive investment up to a maximum of £150,000 whereby the investor will be eligible for income tax relief of 50 per cent.
- Relief is offered regardless of the rate at which the investor pays tax.
- The SEIS applies to investment in companies, and not in unincorporated businesses or LLPs.
- Share loss relief is available, after taking into account tax relief already given on the sale of SEIS shares at a loss.
A further relief is given when capital gains are reinvested into a SEIS company
EIS provides tax incentives in the form of a variety of income tax and capital gains tax reliefs to investors who invest in start ups in very much the same way as SEIS.
- The primary tax relief takes the form of a reduction in Income Tax at a flat rate of the cost of new shares.
- Tax relief is 30%
- There is no minimum amount an investor can invest in any one company (prior to 2012/13 this was £500); however there is a maximum investment of up to £1 million in each tax year
- The maximum amount of investment that a qualifying company can receive is limited to £5 million per year and a lifetime cap of £12million overall or £20million if the company is knowledge intensive.