Navigating Tax Benefits: A Guide on Claiming SEIS and EIS Income Tax Relief

In this article, we will unravel the intricacies of claiming SEIS and EIS income tax relief, providing investors with a comprehensive guide to maximising the benefits these schemes offer.

2 min read
For investors exploring opportunities in the startup and small business landscape, the Seed Enterprise Investment Scheme (SEIS) and the Enterprise Investment Scheme (EIS) offer attractive incentives, including significant income tax relief.

Understanding SEIS and EIS: Before delving into the claim process, let's briefly revisit what SEIS and EIS entail:

  • Seed Enterprise Investment Scheme (SEIS): SEIS is designed to encourage investment in early-stage startups. Investors can benefit from a range of tax reliefs, including income tax relief, capital gains tax exemption, and loss relief.

  • Enterprise Investment Scheme (EIS): EIS extends the principles of SEIS to a broader range of companies. It encourages investment in small and medium-sized enterprises (SMEs), providing tax incentives similar to SEIS.

Steps to Claim SEIS and EIS Income Tax Relief:

1. Eligibility Check:

Ensure that the investment meets the eligibility criteria for SEIS or EIS. Both schemes have specific requirements regarding the company's size, business activities, and the investor's status.

2. Obtain the SEIS or EIS3 Certificate:

The company in which you've invested must provide you with the SEIS3 or EIS3 certificate. This document confirms that the investment is eligible for tax relief.

3. Gather Necessary Information:

Collect all relevant details, including the amount invested, the date of the investment, and the details from the SEIS3 or EIS3 certificate. This information is crucial for accurately completing your tax return.

4. Complete the Self-Assessment Tax Return:

If you're not already completing a self-assessment tax return, you'll need to register for one. Report your investment and claim the income tax relief in the "Additional Information" section.

5. Inputting the Investment:

In the tax return, navigate to the "Tax reliefs" section and find the area related to SEIS and EIS. Input the relevant details from your investment and the SEIS3 or EIS3 certificate.

6. Claiming the Relief:

Clearly indicate the amount you're claiming as income tax relief. The relief is typically 50% of the amount invested for SEIS and 30% for EIS. Ensure you're not exceeding the maximum annual limit for income tax relief.

7. Submit Your Tax Return:

Once you've filled in all the necessary information, review your tax return for accuracy and submit it to HM Revenue & Customs (HMRC).

8. Receiving the Tax Relief:

HMRC will process your claim, and if everything is in order, you'll receive the income tax relief through a reduction in your tax liability.

Conclusion: Claiming SEIS and EIS income tax relief is a valuable process for investors supporting the growth of startups and SMEs. By understanding the eligibility criteria, obtaining the necessary certificates, and accurately completing the self-assessment tax return, investors can maximize the benefits these schemes offer.

Disclaimer: This article should not be considered investment advice. As with any tax-related matters, seeking advice from a financial professional can provide additional clarity and ensure a seamless process.
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