Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) are HMRC approved tax reliefs for individuals who decide to invest in shares in certain qualifying companies. They exist to encourage individuals to invest in small, higher-risk trading companies to help such companies to raise funding, other than by way of loans.
The headline benefits of each scheme include the following:
- EIS : Income Tax relief of 30% on the amount invested, for example if the investment was £100,000, £30,000 would be deducted from the individual’s income tax bill; and
- SEIS : Income Tax relief of 50% on the amount invested, which would be a £50,000 income tax reduction on a £100,000 investment.
Capital Gains Tax
Both schemes provide that on the disposal of shares which qualify for either EIS or SEIS relief, the proceeds of such sale are exempt from capital gains tax.
Please note that to qualify for such benefits numerous conditions must be met by both the investor and the company, including that the shares must be held for a minimum of 3 years.