Seed Investment Enterprise Scheme(SIES)
The Seed Enterprise Investment Scheme (SIES) was developed to aid young companies to raise equity finance through tax reliefs for individual investors who buy new shares in such establishments. It goes hand in hand with the Seed Enterprise Investment Scheme that offers tax relief to investors in high risk small companies. Tax relief for such companies is offered at a higher rate.
SEIS is applicable to shares issued on or after 6th of April 2012 and mirror the rules implemented to EIS.
Income Tax Relief
If a company has a UK tax liability against which the relief can be set, income tax relief will be available to people investing in shares. This is for those who meets the SEIS requirements. In this case investors do not need to be UK residents. Such shares should be retained for 3 years for the relief to be implemented. In case if they are disposed within the initial 3 years the relief will be either reduced or withdrawn entirely.
Relief is available at 50% of the price of the shares on an annual investment that does not exceed £100,000. A claim to relief can be filed up to 5 years later. A carry-back option is also available for the acquired shares to be treated as shares that have been acquired in previous years. The relief cannot be carried before 2012-2013 as there is no SEIS rate prior to that tax year.
Any profit is free from capital gains tax. If the income tax relief has been received on the cost of shares and the shares have been sold following being held for a minimum of 3 years. In case if the claims on income tax have been made any other sale of shares with not be subject to exemption from CGT
Venture Capital Schemes
An establishment can pursue a share issue under SEIS with others under EIS or Venture Capital Trust investments. At least 70% of the monies raise through SEIS need to be spent before new ones are issued.
If a company has already had investment from VCT or issued shares on EIS compliance statement, then no shares under the SEIS can be issued by the company.