The Seed Enterprise Investment Scheme (SEIS) is a UK government initiative designed to encourage investment in early-stage, high-risk companies. Launched in 2012, the SEIS offers a range of attractive tax incentives to investors who support startups and small businesses, providing much-needed capital for companies that are in the early stages of development.
- Having fewer than 25 employees
- Gross assets of less than £200,000.00
- Being in a qualifying trade
Income Tax Relief
One of the main benefits of SEIS is 50% income tax relief on investments made in qualifying companies. For instance, if an investor puts £10,000.00 into a business under SEIS, they can reduce their income tax bill by £5,000.00. The relief is available to individual investors who hold the shares for at least three years.
Capital Gains Tax Exemption
If an investor sells their SEIS shares and makes a profit, the gain is completely exempt from CGT, provided the shares have been held for at least three years. This offers significant tax savings for investors who back successful startups.
CGT Reinvestment Relief
If investors have capital gains from other assets, they can reinvest those gains into SEIS-qualifying companies and defer CGT on the original investment. This can offer further tax advantages for individuals looking to reduce their overall tax liability.
Inhertiance Tax Relief
SEIS investments also qualify for 100% IHT relief, meaning that if the investor holds the shares for at least two years, the shares are exempt from inheritance tax, making it a useful tool for estate planning
While SEIS offers significant tax advantages, it is important to note that investing in early-stage companies is highly speculative and risky. Many startups fail, and there is a real risk of losing the capital invested. SEIS is generally suited for investors who can afford to take on this level of risk.
SEIS is an attractive option for investors seeking high-risk, high-reward opportunities. It provides substantial tax reliefs that can help offset the risk of investing in early-stage businesses. However, potential investors should carefully consider the risks and ensure they are comfortable with the possibility of losing their investment.
If you have any questions regarding investment in the Seed Enterprise Investment Scheme please get in touch with our team of qualified financial advisers for a no obligation chat.
Imogen Tallent
Financial Adviser
The London Stock Exchange was opened by Elizabeth I in 1571.
During the 17th century, stockbrokers were not allowed in the Royal Exchange due to their perceived rude manners they instead operated from other establishments in the vicinity, notably Jonathan’s Coffee-House.
As with all financial planning, there is no one size fits all approach to investment.
How you save and invest your money will depend on your life goals and personal circumstances. We always recommend you seek professional advice before making any investment decisions, however as a general rule, for short-term savings you could consider high-interest savings accounts or Cash ISAs. For long-term growth then investment in stocks and shares, bonds or pension funds may be more suitable.
It is important to balance your risk by having a mixed portfolio covering both the short and longer term.
A common rule is to keep 3–6 months’ worth of expenses in an easy-access savings account for emergencies, then invest any additional funds based on your financial goals and risk tolerance.
Working with a qualified financial adviser will enable you to structure your savings and investments to suit your individual circumstances.
Low-risk options include government bonds (gilts), fixed-term savings accounts and diversified funds. However, all investments carry some level of risk, and inflation can erode the value of cash savings over time.
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Yes, open conversations about areas such as wealth transfer, estate planning and financial goals help ensure smooth wealth succession and prevent misunderstandings in the future.
At Digby Associates we regularly provide intergenerational financial advice working together with family members to help them meet their own individual financial goals as well as ensure create a structured financial plan to enable a smooth and tax-efficient transfer of wealth throughout the generations.
Ethical investing involves choosing investments that align with personal values, such as environmental sustainability, social responsibility, and good corporate governance (ESG). Investors can select funds that avoid industries like tobacco, fossil fuels, or arms manufacturing while supporting companies with strong ethical practices.
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