If you run a UK business formed only recently, you might already know about the Seed Enterprise Investment Scheme. This scheme, known as SEIS for short, lets a small but promising UK firm make itself more attractive to investors by letting them claim tax relief on their investment.
Nonetheless, so much jargon is attached to the SEIS terms that they could easily leave you bewildered. Here are some particular details about SEIS which you might have too easily overlooked.
An investor can claim SEIS relief for more than three years
One of the SEIS’s headline merits is that it allows investors to collect income tax relief equal to potentially as much as 50% of their investments. Though this relief is subject to a per-annum cap of £100,000, it can still be claimed for up to five years after the 31 January of the investment year.
You might have overlooked this detail due to the more widely-publicized requirement that the investor holds the shares for at least three – not five – years after the shares were issued.
Your company’s trade must be a “qualifying” one
There are various restrictions on each SEIS-compliant firm’s size – including that the number of employees must not exceed 25, says Startups.co.uk, while the gross assets must be £200,000 or less.
It may still have eluded your notice that the company has to be in a “qualifying” trade as well – though, fortunately, most UK trades fall into this category. The trade wouldn’t qualify it was in – to list some examples – particular financial activities, farming or property development, says bytestart.co.uk.
You can use a crowdfunding campaign under SEIS
While looking for potential investors, you might have wondered whether you could use crowdfunding as a means of securing support. The reassuring answer is in the affirmative, though you would have to heed particular implications of guidelines recently revised by HMRC…
Her Majesty’s Revenue and Customs, the UK’s tax-collecting public body, introduced these guidelines for SEIS applicants, as Crowdfund Insider details. The site adds how you can jump the higher hurdles.
You can get help with obtaining SEIS Advance Assurance
The tightened guidelines mentioned above have complicated the manner in which you need to prepare for SEIS Advance Assurance. However, if you fear potentially stumbling at the first hurdle in your application to HMRC, a company like Accounts Lab can step in to assist you.
This company, which works out of the British city of Leeds, has an impressive track record in helping startups to successfully apply for SEIS Advance Assurance.
The tax relief can be carried back to a previous tax year
When an investor considers financially fuelling your SEIS-compliant business, you might wonder: “Can you backdate SEIS?” Though the answer to this question is ultimately “no”, it remains possible to apply SEIS income tax relief to the preceding tax year.
The Accounts Lab website further details terms of what is known as the “carry back” facility. On request, the company can provide yet further advice about SEIS.