Have You Used Your EIS/SEIS Benefit?

With the end of the financial year around the corner, time is running out for you to take full advantage of the UK’s generous EIS (Enterprise Investment Scheme) and SEIS (Seed Enterprise Investment Scheme) benefits.

To recap, under EIS, your benefits include:

  • Income tax relief of 30 per cent – meaning if you invest £10k in an eligible company, you can take £3k off your income tax bill in the year you invest.
  • 100% capital gains tax relief on any profits you make from an EIS investment.
  • Loss relief – should you make a loss on your investment, you can offset that loss against your income tax.
  • No inheritance tax to pay on EIS shares.

To be eligible for EIS reliefs, you generally must hold the shares for at least three years before selling them, and there are certain company sectors that are not eligible.

SEIS benefits, which encourage investment into very early stage companies (less than 2 years old) include:

  • Income tax relief of 50 per cent – meaning you get £5k off your income tax bill for investing £10k under SEIS.
  • No capital gains tax to pay on profits, no inheritance tax, and you can claim loss relief in the same way as EIS.
  • Capital gains reinvestment relief – if you have recently paid capital gains tax on other investments, you can reclaim up to 50 per cent of the tax paid, if you reinvest that money into SEIS opportunities.

You can invest a maximum of £1 million each year through EIS (£2m if at least £1m of the investment is invested into knowledge-intensive companies), and £100k into SEIS eligible companies.

For both schemes, you can claim relief in either the tax year you make the investment or the tax year before you make the investment – if you choose to treat some or all of the investment as being made in a previous year.

You can only claim relief against the amount of Income Tax you need to pay in the UK and you cannot carry forward unused Income Tax relief to future tax years.

To take advantage of these benefits this tax year, you need to invest before April 5th, 2020.

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