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:

But first, please understand what these schemes entail:
Seed Enterprise Investment Scheme (SEIS)
SEIS encourages investment in startups and small businesses with less than 25 employees. Income Tax and Capital Gains tax breaks for investors are generous. Companies can use the relief to attract additional investment for their own business. Investment in a company must be maintained for at least three years to claim the full tax reliefs available.
Enterprise Investment Scheme (EIS)
Generally, EIS is open to unlisted trading businesses with less than 250 full-time employees and assets worth less than £15m. Complete eligibility rules are complex though. Income Tax and Capital Gains tax breaks are available for investments but you need to maintain your investment for at least three years to claim the full tax reliefs.
Venture Capital Trusts (VCT)
VCTs operate by indirect investments through a mediated fund. In fact, they are similar to the investment trusts obtainable on the stock exchange, but a high-risk environment. You must keep your whole investment in a VCT for five years. Losses incurred on the sale of VCT shares are not allowable for capital gains tax purposes.

What you get with 3E’S tax relief support

Disclaimer

The contents of this web page are provided as an information guide and 3E’S Accountants is not responsible for any consequences arising out of the use of or reliance on this information, and do not accept any liability for any loss incurred. In particular, this document does not constitute specific legal or business advice nor should it be taken as such. Parties in need of such advice are urged to consult their legal advisers, accountants or other professional advisers.

Our clients love us for our brilliant services.

Is 3E'S the right choice
for your business?

We could throw a long list of reasons at you for working with us. But we’ll stick with a few:

Giving you an overview of your business’ financial status gives you the insight to take the right business decisions.

When it comes to your finances, you want the best people to be looking after it. With 3E’S, that’s never a problem!

Sure, we’re experts in many areas of accounting but that doesn’t mean we charge the earth. We operate a fair-priced service.

Redirect your efforts to scaling your operations. We’ll handle your accounts.

3E’S efficient services help you boost your business performance as a whole.

Knowledge to power your business

Explore our carefully-picked accountancy blogs, company news and industry updates.
Cryptocurrency Accountants

Crypto is a new, fast-moving sector which has seen an increasing interest from individuals and companies alike. The law on taxes … Read more

Dividend tax to increase from 6 April 2022 – Implications for business owners

The government has confirmed that it will not be backing down on the planned hike in National Insurance (NI) and dividend … Read more

Comprehensive accounting service for small businesses

At 3ES Accountants, we provide a comprehensive accounting service for small businesses. We were once a start-up company ourselves, which means … Read more

Download freebies

Grab free copies of accounting eBooks, tax checklists, business guides and other information from 3E’S.

Looking for accountants
to help you grow your business in the UK?

Streamline your accounting and financial processes with award-winning accountants.

Grow your business, and build lasting client relationships.

X

Discover how we can support your business.

Our unique combination of expert accountants, dedicated client managers, and full range of accountancy solutions has always impressed our clients.

Contact now