SEIS, EIS, and VCT tax relief
Expand your investment portfolio and attract SEIS, EIS, and VCT tax relief
Venture capital schemes offer businesses an effective way to benefit from relief on income tax and capital gains tax.
We can help you identify how much and when you should invest in the qualifying shares after reviewing your tax position, and when you should claim relief in the current year or carry back your investment to the previous year.
All businesses and individuals are liable to pay tax on the revenues generated by their venture. This can be a considerable sum, which can be better utilised for further expanding operations.
You can invest in three government tax schemes. However, only individuals can get relief on some of your income/profit and benefit from regular returns on your investment.
The Seed Enterprise Investment Scheme (SEIS), Enterprise Investment Scheme (EIS), and Venture Capital Trusts (VCTs) allow individuals to fund unlisted trading (but qualifying) SMEs and SMBs.
Initially introduced with the aim of raising private capital for growing businesses, the generous tax incentives make them popular when looking to maximise venture capital.
That means if you register yourself as an investor for any of the schemes, you’ll maximise your income tax and capital gains tax relief, and be compensated for taking a greater risk with enhanced overall returns.
But which scheme is right for you? With our experience, we can help you avoid common pitfalls that can cause problems,
including making you ineligible to invest in other businesses.
So, what are you waiting for? Let’s work together today!
How the schemes compare for Income Tax relief*
Scheme | Maximum annual investment you can claim relief on | Percentage of investment on which you can claim | Tax relief on income from dividends | Loss relief | Business Relief |
EIS | £1 million £2 million if at least £1 million of that is invested in knowledge-intensive companies | 30% | No | Maximum exposure of 38.5p in the £1 for a 45% Income Tax payer | Potential inheritance tax saving of 40p in the £1 after 2 years |
SEIS | £100,000 | 50% | No | Maximum exposure of 27.5p in the £1 for a 45% Income Tax payer (or 13.5% if CGT Reinvestment Relief claimed) | Potential inheritance tax saving of 40p in the £1 after 2 years |
VCT | £200,000 | 30% | Yes | Maximum exposure of 38.5p in the £1 for a 45% Income Tax payer | Potential inheritance tax saving of 40p in the £1 after 2 years |
*Data taken from www.gov.uk
Our team of tax experts can take you through all of the technicalities required to ensure your investment is made in a compliant manner to enable you to maximise your income tax relief each year.
How the schemes compare for Capital Gains Tax relief*
Scheme | Personal Capital Gains Tax relief available on your initial investment | Type of Capital Gains Tax relief on initial investment | Gains exempt from Capital Gains Tax when you sell shares | Relief available for capital losses against income | CGT Freedom | CGT Deferral Relief |
EIS | Yes on 100% of investment | Deferral | Yes if you received Income Tax relief | Yes | No Capital Gains Tax to pay on any EIS gains after 3 years | Potential unlimited indefinite deferral of an existing CGT bill |
SEIS | Yes on 50% of investment, capped at £50,000 | Exempt from tax | Yes if you received Income Tax relief | Yes | No Capital Gains Tax to pay on any SEIS gains after 3 years | Potential exemption of an existing CGT bill on 50% of the gain, to the extent reinvested |
VCT | N/A | N/A | Yes | No | No Capital Gains Tax to pay on any VCT gains after 5 years but your entire investment must be held for the duration. | Potential unlimited indefinite deferral of an existing CGT bill |
*Data taken from www.gov.uk
There are numerous factors to be aware of before you consider investment in venture capital schemes, and so it is important you talk to experts who can ensure that.
We help all kinds of businesses identify appropriate investment and get tax relief:
Seed Enterprise Investment Scheme (SEIS)
Enterprise Investment Scheme (EIS)
Venture Capital Trusts (VCT)
What you get with 3E’S tax relief support
- Check whether your business meets all the criteria for registering as an investor, and explain how you can maintain them for the length of the investment.
- Suggestions on how much and when should invest in SEIS/EIS/VCT qualifying shares after reviewing your tax position.
- Assistance in sorting out necessary paperwork for HMRC means you can be confident your application will be tip-top.
- Give you guidance on when it is time to claim your tax relief and whether additional capital can be invested elsewhere.
- Calculation of expected income tax relief available on the investment.
- Information on how to maximise the tax benefits of all three schemes available in combination as well as individually
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