Claim EIS and SEIS Tax Relief for Investor

EIS and SEIS allow investors to invest in small-scale businesses. SEIS and EIS are investment schemes that help start-ups raise capital. Investors have the opportunity to receive relief from income taxes for investments made in small businesses. This could result in significant savings.

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Crawley’s Best Tax Accountants For EIS and SEIS TAX RELIEF

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How we help investors to claim tax relief for SEIS and EIS investments?

Investors can get tax relief when they subscribe to shares in qualified EIS, SEIS or VCT companies. This can lead to significant tax savings if the timing and amount are carefully planned.

We offer advice and assistance for both investors and business owners. Highly experienced chartered accountants advise clients on SEIS or EIS investments and assist them with all aspects of the scheme.

We assist investors in claiming all the reliefs they are entitled to and in managing their investments wisely. We are available to assist eligible startup companies who wish to take advantage of SEIS’s business benefits.

Flat rate 30% income tax relief is available. Maximum investment that qualifies for EIS income tax relief in any tax year is £1,000,000. The tax relief on an EIS subscription can be carry back to the previous tax year. The lock in period to hold investment is at least 3 years. In other words, If the investor disposes of the EIS shares within three years, there will be income tax relief withheld. CGT is not applicable to gains on the sale or transfer of EIS shares if certain conditions have been met at the disposal date. Capital gains tax is allowed for any loss that results from the sale of EIS share. Reinvestment relief is available for individuals who sell assets and use the proceeds to acquire EIS shares.

Flat rate 50% income tax relief is available. Maximum investment that qualifies for SEIS income-tax relief is £100,000. A SEIS subscription can be carried back to the previous tax year. If the SEIS shareholder disposes of the shares within three years, income tax relief will be withheld. CGT is not applicable to gains on SEIS shares if certain conditions have been met at the time of disposal. Capital gains tax is allowed for any loss on the SEIS share sale. Reinvestment relief is available for individuals who sell assets and use the proceeds to acquire qualifying EIS shares.

Flat rate 30% income tax relief is available. Maximum investment that qualifies for VCT income tax relief in a tax year is £200,000. As with SEIS and EIS, there is no carryback option available to claim in previous year. Dividends on the first £200,000 of VCT shares are exempted from tax. If the investor sells his shares within five years of their issue, income tax relief will be withheld. Any gain from the sale of shares in VCT is exempted from CGT if they are made at profit.There is no relief available for the loss incurred on the sale of VCT shares, hence not deductible for the capital gains tax calculation purpose.

After reviewing your tax situation, we provide expert services that include personalised advice on how much to invest in these qualifying shares. The timing when is the best for you to invest in these shares. How to claim tax relief for the current year or carry back previous year. Calculation of the expected income tax relief on the investment. Contact us if you are considering making an investment or have already made one.

Complete and submit an annual personal self-assessment tax return to claim SEIS and EIS benefit for investor .

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EIS benefits for investors

EIS provides tax relief to investors. Investors are attracted to the EIS because it offers tax relief on capital gains and income tax. The current flat rate for income tax relief is up to 30%. EIS offers two benefits in capital gains tax: deferral and exemption.

Capital gains are exempt if you have EIS shares for at least three years and receive income tax relief. CGT exemption could be possible by holding on to your shares for more than three years.

SEIS Investment Tax Relief for Investors

You can get both ongoing and upfront tax relief.

  • Tax relief up to 50% on investment
  • Tax-free growth
  • Reinvestment relief up to 50% on Capital Gains
  • Tax relief for inheritance
  • Relief from Loss o exit 

Remember that tax rules may change, and that benefits will depend on your particular circumstances. SEIS tax benefits can only be claimed if the company has maintained its SEIS status.

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Social Investment Tax Relief for Investor

SITR is a type of state aid that helps organisation raise funds to support their trading activities.

  •  Community interest company  
  •  Community benefit society with an asset lock  
  •  Charity can be either a trust or a company.  

This allows investors to receive tax relief for shares or money they invest or lend to the company. However, investors and companies must follow the scheme rules for at most 3 years. Investors can only claim relief for up to £1 million at 30%. The Dividend income is not eligible for tax relief.

FAQ

Most frequent questions and answers

SEIS stands to mean Seed Enterprise Investment Scheme and is aimed at startups only, while EIS applies to more established SMEs. SEIS is a tax relief program that allows investors to receive greater tax relief for higher-risk investments.

CGT deferral relief is available to investors in EIS-qualified companies. This allows them to defer payment of gains. You can gain by disposing any asset and reinvesting that amount in EIS qualifying company. However, the new investment must be made within 3 years of the gain or one year prior to the gain. It doesn’t matter if the gain is related to the company; investors who are not connected can receive both CGT deferral relief as well as income tax relief.

Investors must keep their shares for at least 3 years after the date they were issued to be eligible for the tax reliefs of 50% or 30% 30% income tax reduction.

SEIS / EIS investors also have the benefit of loss relief. You can choose to have your losses offset against your income if you dispose of shares at a loss. It does not require to be set off against only capital gain.

Investors can get loss relief by multiplying the amount of the loss and their marginal income tax.

If preferred, shares can be treated as if they were acquired in the prior tax year. The income tax liability for the previous year is considered instead of the year that the shares are acquired. However, the annual cap on relief applies.

You can claim relief for EIS, SEIS, and SITR either in:

  • The tax year in which you made the investment OR
  • The tax year prior to the investment. If you wish to consider some or all of your investment as made in a previous year,

Only the amount of income tax you have to pay in the UK can be claimed as relief. Unutilised Income Tax Relief cannot be carried forward to future tax years.

You can only claim tax relief if you invest in a VCT in the year that you invested. Dividends from VCTs are exempted from Income Tax, for both newly issued shares and previously owned shares.

If you invest through SITR, and receive new shares of debt investment in a company in which you already have other shares or investments, you cannot claim income tax relief, unless the shares you already hold:

  • When the company was founded, you were given these documents.
  • They had submitted with a compliance statement before them

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