SEIS income tax relief

SEIS income tax relief

Didn't find your answer?

My wife and a former business partner have set up a company, both of whom have invested in the start-up (50% each in shares) and are directors. Whilst I have no shares I am a non-exec director. All three of us have independent income streams and so invest time and energy into the company but are not employees and receive no income (not even expenses) from it.
 
I thought that because my wife and BP had a “substantial interest” in the company, they would not be eligible for income tax relief under the Seed Enterprise Investment Scheme. If so, can someone explain why non-eligibility:
 
“... does not apply, subject to certain conditions, at any time when the only shares issued are the original subscriber shares.”
 
As stated in HMRC Helpsheet 393. Does this mean they can receive income tax relief on their investment? 
 

Replies (1)

Please login or register to join the discussion.

avatar
By Paul Soper
18th Nov 2013 18:27

Different objective

The provision concerning subscriber shares applies only to an 'on-the-shelf' period before the company has begun or makes preparations to carry on a trade.  It enables A or A&B to incorporate a company, each having 100% or 50% of the shares, as appropriate, and then issue shares to others, including, perhaps, themselves, provided that as a result of this their holding falls to the required 30% or less level.  Otherwise it would be impossible to start up a company to claim the relief.  FA2013 extends the concept to companies purchased from a company formation agent where, during the same period, the shares in issue are the subscriber shares and the company is not yet active, thus preventing the company being treated as the subsidiary of another that would also prevent relief being claimed - the 'independence principle'.

Thanks (0)