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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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:
Maximise your returns with strategic tax reliefs for SEIS, EIS, and VCT investments.
Our experts provide customised advice to benefit your specific investment scenario.
Benefit from our competitive pricing for high-quality tax relief guidance.
With our support, you can focus more on growing your investments.
We expedite the process of claiming your tax reliefs, improving your investment efficiency.
Frequently asked questions
Yes, there are risks associated with Seed Enterprise Investment Scheme (SEIS), Enterprise Investment Scheme (EIS), and Venture Capital Trust (VCT) investments.
These schemes are designed to encourage investment in early-stage and high-growth potential companies, which inherently carry higher risks compared to more established companies.
Key risks include:
- The invested companies may fail or underperform, leading to a partial or total loss of the invested capital.
- These investments are typically long-term and not quickly sold or converted to cash.
- If the company fails to meet the scheme’s requirements, investors might lose the associated tax relief benefits.
- The valuation of these investments can be highly volatile and subjective.
It’s crucial to perform thorough due diligence and consider the risk factors before investing. Contact us to know more.
EIS tax relief is available to UK taxpayers who invest in qualifying companies. Investors can benefit from several tax reliefs:
- With a maximum annual investment limit, they can claim up to 30% of the amount invested against their income tax liability.
- If they invest those gains in EIS shares, they can defer capital gains tax on gains realised on other assets.
- EIS shares held for at least two years can qualify for Business Property Relief, potentially exempting them from inheritance tax.
- Investors can offset losses against their income or capital gains tax liabilities if the EIS investment fails.
VCT tax relief is available to UK taxpayers who invest in Venture Capital Trusts. The benefits include:
- With a maximum annual investment limit, investors can claim up to 30% of the amount invested against their income tax liability.
- Dividends received from VCT investments are tax-free.
- Any capital gains realised on the disposal of VCT shares are exempt from capital gains tax, provided the shares have been held for at least five years.
SEIS tax relief is available to UK taxpayers who invest in early-stage companies:
- With a maximum annual investment limit, investors can claim up to 50% of the amount invested against their income tax liability.
- Investors can benefit from a 50% exemption on capital gains reinvested in SEIS shares.
- Gains on SEIS shares are exempt from capital gains tax if the shares are held for at least three years.
- Investors can offset losses against their income or capital gains tax liabilities if the SEIS investment fails.
Yes, we can assist with filing the necessary paperwork and documentation with HMRC to claim SEIS, EIS, and VCT tax reliefs. Our team can help you prepare and submit your Self Assessment tax return, ensure you have all required certificates and documents, and provide guidance on compliance with the schemes’ requirements.
We strive to make the process as seamless and straightforward as possible, helping you maximise the tax benefits of your investments.
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