Investing in EIS and SEIS
Can you do SEIS and EIS?
You can apply for the SEIS and the EIS at the same time which will allow some investors to take advantage of the more generous SEIS tax reliefs. But you need to make sure that the SEIS shares are issued at least one day before the EIS shares.
Is SEIS a good investment?
Introduced from the , the SEIS offers entrepreneurs an excellent way to attract investors to risk their capital to start a new venture and we know from experience that it is hard to raise capital right now for profitable existing ventures, let alone new startups.
How much can I invest in SEIS?
The maximum amount you can invest under SEIS is £100,000 per tax year. The minimum investment will vary depending on the fund, but it is typically in the region of £10,000.
What does SEIS mean for investors?
Seed Enterprise Investment Scheme
The Seed Enterprise Investment Scheme (SEIS) was introduced in April 2012 by HMRC to help small, early-stage companies raise funds through individual investors by providing a series of tax reliefs on investments made into qualifying companies.
Which is better SEIS or EIS?
The key difference between the two is that SEIS is explicitly targeted at start-ups and very early-stage companies, while EIS can be used by larger and more mature companies – though these are still relatively small and young in the context of the business and corporate landscape in the United Kingdom.
How does EIS and SEIS work?
Enterprise Investment Schemes (EIS) and Seed Enterprise Investment Schemes (SEIS) are investment schemes designed to encourage investment in small or medium sized companies. They do this by offering tax reliefs to individual investors who buy new shares in your company.
Who Cannot invest in Seis?
Individual investors only. Corporations cannot invest in new businesses under SEIS. Some venture capital funds run SEIS-specific funds where they will invest up to the £150,000 limit of a business. These funds pool together many investors SEIS allocations allowing them to make many investments.
Do you pay capital gains on SEIS?
There are 2 Capital Gains Tax reliefs within the SEIS : reinvestment relief, where a gain arising in tax year on a disposal of any asset is reinvested in shares in a company on which you get SEIS Income Tax relief.
How do I invest in Seis?
How to claim SEIS
- Make sure that the company qualifies for SEIS. The company must fulfil the criteria above (“what companies may be SEIS eligible”). …
- Confirm the company has ‘Advance Assurance’. …
- Make the investment. …
- Wait to receive your SEIS3 form. …
- Use the SEIS3 form to claim tax relief.
How do I claim SEIS tax relief?
You will normally claim SEIS tax relief when you complete your tax return. You will be asked some information which is included in your SEIS3 certificates. These are certificates you receive from each of the companies you invested in, typically a few months after the investment.
Do you pay CGT on EIS shares?
You normally pay no CGT when realising EIS shares, if you have claimed income tax relief on them and the companies still qualify.
What happens if I sell my EIS shares within 3 years?
If you sell EIS shares within 3 years of the date they were issued (and the sale is not to your spouse or civil partner): Income Tax relief for those you sell will be wholly or partly withdrawn. any gain on the disposal will be chargeable to CGT.
What happens if an EIS company goes bust?
Income Tax – Relief Withdrawal:
– If the EIS company goes into liquidation within (generally) three years of the share issue, Income Tax relief originally given is clawed back. The amount clawed back is 30% of any value received on liquidation (up to a maximum of the relief originally given).
Are dividends tax-free on EIS?
How are EIS dividends taxed? Whilst the EIS offers a number of attractive tax incentives when investing into early-stage companies – including up to 30% income tax relief and loss relief – if dividends are paid these are taxed as normal.
How much can I invest in an EIS?
How much can I invest in EIS? The maximum amount you can invest is £1 million per tax year or £2 million, providing anything above £1 million is in ‘knowledge intensive’ investments.
How long do I need to hold EIS shares?
Both the EIS and SEIS regimes require long-term investments and there is a minimum shareholding requirement of 3 years. In general, the EIS / SEIS schemes should only be considered by sophisticated investors who are comfortable holding fairly illiquid assets for at least 3 years.
How do I get out of EIS?
How SEIS / EIS investment exits
- Sale – a company can exit via a trade sale of the shares or assets. …
- Management Buy-Out – management buy out is acceptable, as long as it is not pre-agreed or promised to SEIS/EIS investors at the time of placement.
What happens if EIS company is sold?
The shares that are sold will have a clawback of EIS relief, due to disposing of the shares within less than 3 years. Any gain on the sale will also be subject to capital gains tax. The remaining shares will still qualify for EIS provided the company is still qualifying.
Do EIS pay dividends?
EIS offers the potential for a larger, but longer-term return on investment, but will not pay regular dividends. It’s high investment allowance means that it can be a useful facility for retirement planning, particularly when compared to the UK’s meagre pension allowance.