Summary of Tax Benefits of the Seed Enterprise Investment Scheme
Mark Brownridge of the Enterprise Investment Association outlines the five key tax benefits of investing in a SEIS fund:
Income Tax relief.Seed EIS gives you 50% income tax relief. So, if you make a £10,000 investment in the fund, you'll get 5,000 back courtesy of the taxman. The relief can either be applied in the tax year that the investment is made or moved one tax period earlier (so a investment made in October 2017 could generate a tax relief for the tax period ending 5th April 2017).
Capital Gains Tax (CGT) re-investment relief.
This is where, if you have a gain from another investment that you've realised, you can reinvest that gain into the SEIS fund and get tax relief for half of the tax owing on that gain.
No CGT on exit.
Again, if you've made a £10,000 investment and it happily goes to £20,000, there's no CGT to be paid on the gain of £10,000 that you've made.
Inheritance Tax (IHT) relief.
Once you've made your Seed EIS fund investment and you've gone through a two year holding period, IHT is exempt on the investment that you've made. So, if you made, again, £10,000 investment, there's no 40% tax to be paid on that investment.
Share loss relief. If an investment that the fund makes doesn't do so well, you can apply share loss relief where by you get 45% of tax relief on your marginal rate of tax. Again, more tax relief to be had.
Please speak to the Britbots team to get customised illustrations of the tax reliefs that the fund offers for you.