Paul Howard rakes over the draft legislation for the new seed enterprise investment scheme.
The new seed enterprise investment scheme (SEIS) was proposed in a consultation document published in July 2011, and draft legislation was published in December 2011. The SEIS is an additional venture capital relief so the existing enterprise investment scheme (EIS) relief will continue. The latter is subject to some more changes which will, no doubt, be the subject of another article. Some of the wording used in the SEIS draft legislation has been lifted from the existing venture capital trust (VCT) scheme and the EIS, but there are some important differences.
SEIS relief will only be available for shares issued between 6 April 2012 and 5 April 2017, although this five-year window can be extended by Treasury Order. The relief operates by reducing an individual’s income tax liability by 50% of the amount invested in qualifying shares up to a maximum investment of £100,000 in that year and regardless of the investor’s marginal tax rate. The relief can be used in the year of investment or carried back to the previous year.