Seed Enterprise Investment Scheme

Seed Enterprise Investment Scheme


Author: Niall Murphy

The Finance Bill 2012 introduced a junior version of the Enterprise Investment Scheme, known as the Seed Enterprise Investment Scheme (SEIS).

It will apply to shares issued on or after 6 April 2012, but before 6 April 2017. The period of the scheme may be extended by Treasury order.


The requirements are similar to that of the EIS, but have lower monetary limits.

The main points to note are:

  • income tax relief of 50% is available on the amount invested
  • the maximum investment per tax year per investor is £100,000
  • the investor cannot be an employee of the investee company from the date beginning with the incorporation of the company and ending with the third anniversary of the date the shares were issued to the investor ('qualifying period'), however, they can be a director
  • the investor cannot own more than 30% of the issued capital or have any loan from the company during the qualifying period which would not have been made (or would not have been made on the same terms) if the investor had not subscribed for the shares
  • the money raised must be for the purposes of the qualifying business actively carried on by the company
  • the money must be spent by the third anniversary of the date of issue of the shares
  • the investor company must be unquoted, incorporated in the two years before the investment, have a permanent establishment in the UK, be independent and not control any other company, have fewer than 25 employees and gross assets of less than £200,000, and not received any previous EIS or VCT investment
  • the maximum that a company can raise through SEIS is £150,000


Perhaps the most attractive part of the new proposals is that there is a complete capital gains tax exemption on gains made in 2012/13 which are re-invested in the same year under the SEIS scheme, and the fact that gains arising on shares on which SEIS relief has been claimed are exempt from capital gains tax.