Pixel

SEIS and Inheritance Tax Relief

Gary Green
Gary Green
June 28, 2016

One of the less well-known benefits of the Seed Enterprise Investment Scheme (SEIS) is the availability of inheritance tax relief.

This can result in a 100% inheritance tax relief on the death of the investor (or on certain lifetime transfers). You just need to make sure you held the investment for at least two years.

For more examples on how we use SEIS companies as inheritance trust alternatives then please see our video here. You also benefit from not having to hand over control of your assets, since you'll gain the tax relief as long as you still hold the share assets at death.

Worked Example

For example, let’s look at an investor who invested £100,000 into a SEIS and passed away after making the investment. If the investor died more than two years after the investment date, there should be no inheritance tax liability on the death of the investor.

Wealthy older investors can mitigate their inheritance tax liabilities by investing using the SEIS as part of their estate planning options.

This inheritance tax benefit is not strictly set-out as part of the SEIS scheme. But it is linked 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. HMRC rules state that Business Relief of either 50% or 100% applies on some of an estate’s business assets, which can be passed on:

  • while the owner is still alive
  • as part of the will

100% Business Relief can be claimed on a business or interest in a business as well as shares in an unlisted company.  The IHT rate is 40% on anything above the current £325,000 threshold. As with any investment, remember that income, capital gains tax and other tax reliefs can make a good investment look even better. Nevertheless, you must still use proper due diligence.

It is also important to remember that for an SEIS investment to qualify both the company and the investors must meet all the necessary requirements.

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
March 4, 2022
An Overview of EIS (Enterprise Investment Scheme) - All You Need to Know

There are several benefits for the EIS, or Enterprise Investment Scheme, to make this an interesting...

March 3, 2022
Tax Relief for Angel Investors: Gary Green's Webinar for Stakeholderz

Key Business Consultants' principal Gary Green spoke with Stakeholderz discussing the SEIS & EIS scheme and...

February 23, 2022
What Are EMI Share Schemes? All You Need to Know

If you are considering awarding shares to your employees, an Enterprise Management Incentive is often the...

January 31, 2022
Payments on Leaving Employment: How to Reduce Your Tax Liability

Normally the process for leaving employment is quick and straightforward but this is not always the...

January 17, 2022
HMRC Investigations: What You Need to Know

Discovering that you are being investigated by HMRC can be very stressful, even if you are...

January 14, 2022
Business Transactions - Guide to Planning and Executing Efficiently

There are some transactions in business that are significant and require substantial forward-planning to be a...

January 12, 2022
Why Employee Equity is an Important Issue For Every Business

Being a business leader is about being willing to embrace innovation and be flexible about how...

January 10, 2022
An Employer’s Guide to Settlement Agreements

If you need to terminate the contract of an employee, a properly drafted settlement agreement can...

January 7, 2022
Taxation of Private Company Shares - What Should You Know?

Many companies opt to reward their employees with shares or options because of the manifold benefits...

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 © 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