Tax breaks for Angel investing - Seed Enterprise Investment Scheme (SEIS)

In April 2012, the Government launched a new scheme to provide particular encouragement to angel investors. This new scheme offers up to 50% relief on making investments in very small businesses with growth potential that are at a very early seed or start-up stage which have only just started trading and may have little or no revenues and very few assets.

What relief is available through SEIS scheme?

  • 50% income tax relief on up to £100,000 across all investments per tax year
  • Exemption from capital gains tax on gains realised from disposals of other assets in 2012/13 only where the gains are reinvested in SEIS companies in the same tax year
  • Inheritance tax relief for SEIS investments
  • Exemption from capital gains tax on disposal of SEIS shares after 3 years
  • Allowing losses on the disposal of the SEIS shares to be set off against either income or capital gains

As with EIS, there are a number of requirements in relation to the investors. For example, investors must be unconnected with the company and under SEIS the investor, together with associates, cannot own more than 30% of the ordinary share capital, the issued share capital or the voting power.