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SEIS Income Tax Relief

Gary Green
Gary Green
January 29, 2020

In this article, find out how an SEIS investment can save you money on your Income Tax.

The Seed Enterprise Investment Scheme (SEIS) allows you to invest money in a young business and claim tax relief at the same time. This tax relief can come via Income Tax, Capital Gains Tax and Reinvestment.

Today we’re going to talk about Income Tax.

How Do I Know If I Can Apply?

If you’ve used the SEIS scheme to invest money (through buying shares) you can claim Income tax relief, as long as:

  • You’ve received a form SEIS3
  • None of the restrictions apply

The restrictions involve situations where you actually own substantial parts of the company (the whole point of SEIS is that it’s an outside investor buying shares), or the shares you bought come with conditions (eg a guaranteed return on your money).

The best way to see if any of these restrictions apply is to check out the HMRC SEIS page.

How Does It Work?

Once you’re sure you qualify, make sure you have the following information to hand:

  • The Unique Investment Reference (UIR) for the shares
  • The company name
  • The amount you’re claiming
  • The issue date of the shares
  • How you want to attribute the relief
  • Your SEIS3 form

Then, when you come to do your self-assessment, use the additional information page to fill out the details.

If the shares were issued jointly (so if a single block of shares was issued to you and someone else), you’ll have to apply individually. This means that you’ll both need an SEIS3 form.

How Much Can I Claim?

With a few caveats, HMRC explains: “you can get relief at the rate of 50% on the aggregate of the amounts claimed for shares issued to you in tax year 2018 to 2019”.

You’ll need to check how your relief is affected if:

  • The amount is over £100,000
  • Your tax liability isn’t high enough to absorb all the relief
  • You received value from the company you invested in

In these situations, you can check the details on your SEIS3 form to see how it affects you. Having said that, the calculations can be quite complicated, and you may want to get some professional advice from a tax or, ideally, SEIS specialist.

There are also some rules that apply to which tax year is available for the claim. You may be able to use an earlier year’s allowance, but make sure you are qualified and make sure you don’t go over the maximum amounts.

Key Business Consultants was founded as an SEIS tax specialist accounting firm. So if you’d like to get some advice from a team of chartered accountants who are experts in this area, please get in touch.

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