Pixel

SEIS Relief for Business Owners

Gary Green
Gary Green
September 26, 2017

The Seed Enterprise Investment Scheme (SEIS) rules allow some business owners to invest in their own company.

However, it is important to be aware of the restrictions on who can and cannot invest in a specific SEIS. Anyone connected with the company can't claim Income Tax relief within the SEIS.

Restrictions on SEIS

The main restrictions are as follows:

  1. The investor cannot be employed by the company at any time during the period from the date of issue of the shares, to the third anniversary of that date. A director is not deemed an employee however.
  2. An investor who controls or owns more than 30% of the shares, voting rights or assets either the company itself or a 51% subsidiary of the company cannot claim tax relief.

The interests of the investor’s associates are included in these restrictions. The SEIS legislation defines associates as:

  • business partners
  • trustees of any settlement of which the investor is a settler
  • or beneficiary
  • relatives

HMRC defines relatives as spouses and civil partners, parents and grandparents, children and grandchildren. So, for example, parents could not invest in their children’s businesses.

How To Best Exploit SEIS

However, the list of associates does not include ‘family’ members such as siblings, extended family, partners and in-laws. This leaves an opening for new business owners to seek investment from their extended family. Importantly, these restrictions do not apply to directors who can invest. The rule is that they must not hold a substantial interest in the company.

However, HMRC is likely to closely examine the directors relationship with the company to ensure any investment qualifies under the SEIS rules.

HMRC can withdraw the tax reliefs:

  • if the investor disposes of shares outside the scheme rules
  • if the company loses it's qualifying status.

In addition, there is a significant body of anti-avoidance legislation that seeks to stop investments made for tax avoidance purposes.

We look forward to hearing from business owners who would like to know if they qualify to invest under the SEIS scheme.

Get in touch with us in the office.

Interested in our services?
Fill in your details and a member of our experienced team will be in touch shortly to discuss your needs.
We adhere to strict GDPR rules and do not reveal or sell your data to any third-parties. For more, please read our Privacy Policy.
Latest Insights
September 21, 2021
How to Claim EIS Income Tax Relief in 2021

If you need to know how to claim EIS income tax relief and enjoy what is...

September 2, 2021
Recovery Loan Scheme - What Is It and How Do I Apply?

As businesses seek to re-open and recover from the global pandemic, there are various forms of...

August 16, 2021
The Super-Deduction Scheme - How Does It Work?

You may have heard the term 'super-deduction' recently and wondered if you could be affected by...

August 12, 2021
The Tax Benefits of Non-Domiciled Status for UK Residents

Having a Non-Domiciled Status if you reside in the United Kingdom can have great benefits for...

July 9, 2021
Stamp Duty Land Tax (SDLT) Surcharge for Non-UK Residents

Stamp Duty Land Tax (SDLT) rates have changed again for non-residents buying a home in England...

July 7, 2021
How Is Cryptocurrency Taxed & Do I Need to Fill A Self-Assessment?

Cryptocurrency may live online with no government control or borders, but if you are in the...

July 5, 2021
Venture Capital Schemes: Tax Relief Guide For Investors

When it comes to finding out what tax relief is available for investors using a venture...

July 2, 2021
Claiming Business Asset Disposal Relief in 2021

Business Asset Disposal Relief (BADR) used to be known as Entrepreneurs’ Relief before 6 April 2020....

June 30, 2021
What Is Form 17? Transfer Of Beneficial Ownership

As a general rule, the fall-back position for couples who live together with their spouse or...

View Our latest insights »
Get the latest UK tax & business news and guidance delivered straight to your inbox
We care about the protection of your data. No spam. Unsubscribe anytime.
Copyright © 2021 Key Business Consultants LLP. Reg: E&W OC389322
linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram