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SEIS Capital Gains Tax Relief

Gary Green
Gary Green
February 26, 2020

In this article, find out how an SEIS investment can save you money on your Capital Gains 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 Capital Gains tax.

Capital Gains Tax on Shares

If you make a profit when selling shares, you’ll usually have to pay Capital Gains Tax. There are some exceptions, such as:

  • Shares that were put in an ISA or PEP
  • Shares you hold via an employer share incentive plan
  • Uk government gilts
  • Premium Bonds
  • Qualifying Corporate Bonds
  • Some employee shareholder shares

You can also avoid Capital Gains Tax when you bought your shares via SEIS. There are a few restrictions and conditions, which we’ll explain now.

When Does SEIS CGT Relief Apply?

According to HMRC, you don’t have to pay CGT as long as:

  • You’ve held the SEIS shares for at least 3 years
  • You’ve received SEIS Income Tax relief in full on the whole of your subscription for the SEIS shares and none of the Income Tax relief must have been withdrawn

If you’re not sure how long you’ve held the shares, have a look at the SEIS3 form (you will have got this from the company). The form will have the official date of issue.

There are actually a couple of scenarios where you still might be able to get the tax relief, even if those two conditions are not completely met. Check out the HMRC page on SEIS tax relief for the full details.

What If I Made a Loss On My Shares?

Unfortunately, not every investment leads to a profit! But if you made a loss on your shares, at least you can set if off against any other profits (HMRC uses the word “gains”).

When you’re calculating your loss, you have to adjust the original price of the shares by any Income Tax relief you’ve already claimed (and not withdrawn).

The Capital gains summary notes from HMRC sets out the rules in full. This can be quite a complicated area, so you may want to work with a professional accountant to make sure you’re getting the maximum savings.

Key Business Consultants was founded as an SEIS 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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