Following the announcement in the Autumn Statement, the
Government has introduced the new Seed EIS (SEIS) for shares issued
after 5 April 2012. The rules are summarised as follows:
in order to qualify for the SEIS, a company must be
undertaking, or planning to undertake, a new business, and have
fewer than 25 full-time employees and gross assets of less than
£200,000 at the time of the SEIS investment;
qualifying companies will be able to raise a total of up to
£150,000 under the scheme, and funds raised must be used
within three years. Once 70% of funds have been utilised, the
company may raise funds under the EIS or from VCTs;
the scheme offers up-front income tax relief of 50% for
subscriptions of shares by investors of up to £100,000 (which
can include directors). It should be noted that a claim for relief
under SEIS may not be made until at least 70% of the money raised
by the issue has been spent by the issuing company for the purposes
of the qualifying business activity for which it was raised;
the individual investor limit for SEIS will be £100,000
per tax year; and
there is no CGT payable on the disposal of SEIS shares held for
more than three years.
Furthermore, the rules provide for an exemption from CGT on
gains realised from disposals of other assets in 2012/13 where the
gains are reinvested through the new SEIS in the same year.
The new SEIS is a welcome development, enhancing the EIS tax
reliefs available for equity investments in smaller companies.
However, it is widely thought that the limit of £150,000 that
a company can raise under the scheme is far too small to make any
meaningful difference to the funding options for small
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