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SEIS Working Examples

See some Working Examples

1. Income Tax Relief
Relief is available at 50% of the cost of the shares and is given as a reduction in the tax liability provided there is sufficient liability to offset this against.

Example £
Gross investment in shares
100,000
Less: income tax relief at 50%
50,000
Net cost of investment
50,000

 

2. Capital Gains Tax Re-Investment Relief
Available if an asset disposal is made that would give rise to a capital gain and all or part of the gain is reinvested in qualifying shares, 50% of the reinvested amount will be exempt.

Example £
Gross investment
100,000
Less: income tax relief at 50%
50,000
Cost of investment
50,000
Less: Capital gains tax re-investment relief*
14,000
Net cost of investment
36,000

*Assumed capital gain of £100,000, which would have been taxable at 28%, reinvested.

 

3. Loss Relief
If the investment is unsuccessful and investor experiences zero return from the SEIS investment.

Example £
Gross investment
100,000
Less: income tax relief at 50%
50,000
Cost of investment
50,000
Less: Capital gains tax re-investment relief*
14,000
Loss Relief on Cost of investment**
22,500
Net cost of investment 13,500

*Assumed capital gain of £100,000, which would have been taxable at 28%, reinvested.

**Assuming Highest Rate Tax (45%)

 

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  • The two reliefs mentioned are enhanced benefits relating only to SEIS. However in addition to these, qualifying SEIS investments will benefit from all of the reliefs available to EIS investors (other than the income tax relief as a better option is available under SEIS). An individual wanting to benefit from investment in EIS/SEIS shares will need to check with their financial adviser. Companies must fulfil certain criteria to be eligible for EIS/SEIS investment, but they will normally confirm they are eligible at the time of the fundraising. Further information on SEIS can be found on the HM Revenue and Customs (HMRC) website www.hmrc.gov.uk/seedeis The statements above are intended only as a general guide to the current position under UK law and H M Revenue & Customs practice and may not apply to certain classes of person (such as dealers in securities). Any person who intends to seek to obtain EIS Relief in respect of his investment, or who is in any doubt as to his tax position, or who is subject to tax in a jurisdiction outside the UK, should consult their professional advisers.