What is SEIS?
The Seed Enterprise Investment Scheme (SEIS) offers 50% income tax relief to investors in very early-stage UK startups. On a £20,000 investment, you receive £10,000 back as income tax relief, making the effective cost £10,000. Gains on SEIS investments are exempt from Capital Gains Tax if held for at least 3 years.
What is EIS?
The Enterprise Investment Scheme (EIS) offers 30% income tax relief on investments up to £1,000,000 per year in qualifying UK companies. EIS companies are typically more established than SEIS companies. Gains are CGT-exempt after 3 years, and losses can be offset against income.
What is the difference between SEIS and EIS?
SEIS is for very early-stage companies, typically pre-revenue or early revenue, with a maximum of 25 employees and £350,000 gross assets. It offers a higher 50% relief rate. EIS covers larger, growth-stage companies with up to 250 employees. It offers 30% relief but allows larger investments of up to £1,000,000 per year.
What is SEIS reinvestment relief?
If you have an existing capital gain, for example from selling shares or property, you can invest up to the gain amount into SEIS and reduce that gain by 50%. So a £50,000 capital gain invested into SEIS reduces your CGT exposure by 50% of £50,000, saving up to £10,000 in CGT at a 20% rate.