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Income tax and capital gains tax reinvestment relief is available to investors in the Seed Enterprise Investment Scheme (SEIS). Income tax relief is available to investors who subscribe for shares in a qualifying SEIS company. Shares must be held for three years. Tax relief is given at a rate of 50%. The maximum annual investment is £100,000. Relief is not available if the investor is connected with the company. The company can receive up to £150,000 in SEIS investment.

Capital gains tax relief is available where gains are reinvested in qualifying SEIS shares. Relief is available for 50% of the reinvested gains. The relief is subject to the £100,000 investment cap.

The SEIS is aimed at small higher risk companies. The tax reliefs help the SEIS companies attract funding. The companies must meet certain conditions. Small higher risk companies that meet the requirements of the SEIS should consider using the SEIS to help them raise finance and attract investors.

Example:
Big Ideas Ltd meets the conditions for a Seed Enterprise Investment Scheme and is keen to attract investment.

Rick sells a painting in 2015/16 realising a gain of £60,000. He makes a qualifying investment of £60,000 in Big Ideas Ltd in the same tax year. As long as all the qualifying conditions are met, one half of the gain (i.e. £30,000) is exempt from capital gains tax.