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SEIS gives the qualifying investor extensive income tax and CGT breaks. Therefore, it is helping to drive investment in new businesses across the country.
For investors the main benefits of the scheme are as follows:
- Income tax relief worth 50% of the amount invested on a maximum annual investment of £100,000.
- A 50% exemption from CGT on gains reinvested within the scope of the SEIS.
- Disposals of SEIS shares are exempt from CGT once they have been held for three years and certain conditions are met.
Who Can Be A Qualifying Investor
The qualifying investor cannot be employed by the company from the date of issue of the shares to the third anniversary of that date. This only applies to directors who are allowed to invest provided they don't hold a substantial interest in the company.
A substantial holding is held by someone who controls or owns more than 30% of any of the following in either the company itself or a 51% subsidiary of the company:
- ordinary shares
- issued shares
- voting rights
- assets in a winding up
These restrictions also include the investor’s associates. This leaves some scope for new small businesses to help raise investment from extended family.
At Key Business Consultants we can help you find the right, risk-free investment structure to maximise your tax reliefs and those who you invite into your new venture.