IHT and EIS / SEIS Tax Breaks

Gary Green
Gary Green
August 15, 2017

Here at Key Business Consultants, we help our clients save tax by demonstrating the many benefits of investing in small, unlisted companies using the Seed Enterprise Investment Scheme (SEIS) or Enterprise Investment Scheme (EIS).

A taxpayer investing in the SEIS can benefit from Income Tax relief. It is worth 50% of the amount invested in qualifying individual companies on a maximum annual investment of £100,000. There is an exemption from Capital Gains Tax on disposals of SEIS shares held for three years. There is a 50% exemption from CGT on gains reinvested within the scope of the SEIS.

Differences Between EIS & SEIS

The EIS is similar to the SEIS in helping to encourage investment in small, unlisted companies. However, the limits are significantly larger than for the SEIS. The main tax relief for investors comes in the form of income relief of 30%. The maximum annual amount that an individual can invest through the EIS is £1 million.

One of the lesser known benefits is that you can treat these investments as exempt from Inheritance Tax. Just make sure the deceased invested in the shares at least 2 years before they died.

This relief can be a valuable benefit of the schemes especially for wealthy taxpayers looking to mitigate their Inheritance Tax liabilities. However, it may be difficult for the trustees to be able to sell the shares. Of course, there is a risk that the investment becoms worthless.

Business Relief and IHT

This benefit is not strictly set-out as part of the SEIS and EIS rules. However, there is a link to the Inheritance Tax Business Relief rules. The Business Relief rules generally relate to the ownership of a business, or share of a business included in the deceased estate for Inheritance Tax purposes and 100% business relief is available for qualifying shares in unlisted companies.

As with any investment, it is important to remember that whilst the various tax reliefs can make a good investment look even better, proper due diligence must still be used. It is also important to remember that for an EIS or SEIS investment to qualify both the company and the investors must meet all the necessary requirements.

Call us in the office to talk about EIS and SEIS and the opportunities that might be available to you.

Interested in our services?
Fill in your details and a member of our experienced team will be in touch shortly to discuss your needs.
Contact Form Demo (#1)
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
June 13, 2024
Credit Card Sales Campaign

Originally set up in 2014, HMRC’s Credit Card Sales Campaign was aimed at individuals and businesses...

June 6, 2024
Advice Regarding Tax Litigation

The term “litigation” is used to refer to a tax dispute’s resolution when a statutory appeal...

May 30, 2024
Let Property Campaign

HMRC has looked closely into tax compliance among UK property investors and UK landlords since 2013...

May 23, 2024
What Is A Residence & Domicile Enquiry?

Questions regarding domicile and residence have significant effects on taxes that are payable and due in...

May 16, 2024
Company Tax Investigations By HMRC

If HMRC decides to carry out an investigation into a company’s tax returns, it is important...

May 9, 2024
A Guide To The WDF (Worldwide Disclosure Facility)

More than a hundred countries around the world have made a commitment to exchange information with...

May 2, 2024
Contractual Disclosure Facility And HMRC COP9

Any tax investigation that HMRC carries out can be regarded as serious. However, if you become...

April 25, 2024
A Guide To Managed Service Companies, Personal Services Companies And IR35

Usually, people work as either a self-employed individual or an employee for a business. Nevertheless, there...

April 18, 2024
Criminal Tax Investigations

It is HMRC’s aim to ensure that taxpayers comply with the regulations and law, but HMRC...

View Our latest insights »
Get the latest UK tax & business news and guidance delivered straight to your inbox
Newsletter Form (#2)
We care about the protection of your data. No spam. Unsubscribe anytime.
Copyright © 2022 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