Seed Enterprise Investment Scheme (SEIS) income tax relief takes the form of a tax reduction for the tax year in which the shares are issued and is the amount equal to tax at 50% for the current year on:
• the amount (s)subscribed for shares issued in that year in respect of which the individual is eligible for and claims SEIS relief, or• if less, £100,000.
The individual can claim any part of an issue as if the shares had been issued in the preceding tax year.
Link with CGT
Where shares are disposed of after the end of Period A (from incorporation to the end of three years from the date of issue of the shares), the gain is not chargeable.
For 2012/13, gains realised on the disposal of assets in 2012/13 that are invested through SEIS in the same year are exempt from CGT. HMRC also allow investments made in 2013/14 and carried back to 2012/13 to qualify for the CGT exemption.
FA 2013 extended the CGT exemption by allowing investors making capital gains in 2013/14 to receive a 50% exemption when they reinvest those gains into qualifying companies in either 2013/14 or 2014/15. This effectively created a cap on the exemption of £50,000.
The relief was originally introduced for a period of five years and has now been made permanent in respect of both the income and capital gains tax reliefs applicable.
Make sure clients know that this temporary relief has become permanent!