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The Seed Enterprise Investment Scheme (SEIS)

The Seed Enterprise Investment Scheme (SEIS), a sister scheme to the Enterprise Investment Scheme (EIS), offers one of the most attractive tax incentives for investors looking to support high-growth, early-stage businesses in the UK. With a variety of tax reliefs designed to maximise returns and reduce investment risks, SEIS encourages funding for innovative companies poised for growth.

Download our guide to discover how you can use the SEIS to make tax-efficient investments while helping to shape the future of British businesses.

Investor Guide

Maximise Tax Efficiency through SEIS Investments

  • Claim 50% income tax relief on the value of your SEIS investment.
  • Pay no capital gains tax on profits from SEIS shares after holding them for at least three years.
  • Defer capital gains tax by reinvesting gains into SEIS-eligible companies.
  • Pass on shares free of inheritance tax after holding them for two years.
  • Claim loss relief in the rare event that your SEIS investment doesn’t perform as expected.
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What is an SEIS Calculator? How the SEIS Calculator Works Benefits of Using the SEIS Calculator Example of EIS Calculations

What is an SEIS Calculator?

This EIS calculator is a specialised tool designed for investors to estimate the potential benefits of investing in a SEIS-eligible opportunity. It provides a detailed analysis of the various SEIS tax reliefs and financial gains available, essentially working as multiple calculators in one, including:

  1. Expected return calculation
  2. SEIS capital gains tax deferral relief
  3. SEIS income tax relief
  4. SEIS loss relief
  5. Net loss calculator

Gaining a comprehensive understanding of these SEIS reliefs is crucial for investors to discover how schemes like the Seed Enterprise Investment (SEIS) and Enterprise Investment Scheme (EIS) (the original scheme targeting investment at more developed startups) can be combined with other investments to create a more robust tax-efficient investment strategy.

How the SEIS Calculator Works

The SEIS calculator functions by analysing the financial circumstances of each investor.

By incorporating variables such as investment amount, tax bracket, and anticipated growth, the calculator provides a detailed projection of potential tax reliefs, including SEIS loss relief and CGT deferral.

This comprehensive analysis extends to estimating the overall financial impact of a SEIS investment, offering investors a transparent view of potential performance, all factors considered.

By leveraging this tool, investors can strategically plan their investments, optimise tax efficiency, and align their financial strategies with long-term goals.

Benefits of Using the SEIS Calculator

Utilising a SEIS tax relief calculator offers several compelling advantages for investors:

Accurate Estimation of Tax Reliefs: The calculator provides precise calculations of tax savings, including SEIS-specific reliefs such as income tax relief and capital gains tax exemption. This accuracy allows investors to plan their investments with greater precision and confidence.

Optimised Tax Efficiency: The tool analyses investment scenarios to help investors maximise tax benefits while minimising liabilities within their investment strategy. This optimisation enhances the overall tax efficiency of an investor's portfolio, ensuring that every investment decision contributes positively to their financial health.

Enhanced Financial Planning: By projecting potential investment gains and tax implications, the calculator supports the development of robust long-term financial strategies. This empowers investors to pursue their financial goals with increased assurance, knowing they have a clear understanding of the potential benefits and risks associated with SEIS investments.

Incorporating the SEIS calculator into your investment planning process can transform how you approach financial growth, offering clarity and strategic insight every step of the way.

Example of EIS Calculations

Understanding the potential benefits of the Seed Enterprise Investment Scheme (SEIS) can be greatly enhanced by examining specific examples of SEIS calculations. These examples illustrate how the SEIS tax relief calculator effectively computes these benefits.

SEIS Investment Gain

An investor who invests £20,000 in a SEIS-qualifying company and achieves a 3x return, growing the investment to £60,000, can benefit significantly from tax-free capital gains. The £60,000 gain is exempt from capital gains tax, already substantially enhancing the overall return on investment.

SEIS Loss Relief

Consider an investor who invests £50,000 in an SEIS-qualifying company. If the investment results in a loss, the investor can claim loss relief against their income tax. Assuming a 45% income tax rate, the investor could potentially claim £11,250 in loss relief, significantly mitigating the financial impact of the loss.

SEIS Income Tax Relief

If an investor puts £100,000 into a SEIS-qualifying company, they can claim 50% income tax relief on the investment. This results in a £50,000 reduction in their income tax liability, making the investment more financially attractive.

Net Loss Relief

Similar to SEIS loss relief, net loss relief allows investors to combine income tax relief with loss relief for enhanced financial protection.

For instance, if an investor places £100,000 into an SEIS investment opportunity and the investment unfortunately results in a total loss, they can claim both the 50% income tax relief and the loss relief.

With a 45% income tax rate, the investor could claim £50,000 from income tax relief and an additional £27,500 from loss relief.

This means the net loss would be reduced to £22,500, representing a 22.5% loss on the original investment, offering a significant cushion in the rare event that the investment does not perform as expected.

Download SEIS Guide

SEIS Calculator (FAQ)

1. Does the SEIS Calculator Account for Capital Gains Tax Deferral?

Yes, the SEIS calculator is designed to handle capital gains tax deferral for non-SEIS assets. After inputting your total capital gain and the applicable capital gains tax rate, the calculator will determine how much of the gain can be deferred when reinvested into SEIS opportunities.

This feature provides clarity on one of the most valuable benefits of the scheme, helping investors better understand their tax planning options and how SEIS can fit into their overall financial strategy.

2. Can the SEIS Calculator Handle Multiple Investments at Once?

Currently, the SEIS calculator does not directly accommodate multiple investments in a single calculation. However, you can combine the total amount of your SEIS investments into one input to calculate the overall tax benefits. For example, if you’ve made three separate SEIS investments, you can add the amounts together to see the combined tax reliefs.

For projected returns, separate calculations must be made for each investment. This limitation exists because the calculator is tailored to provide precise and individualized projections for single investments. The ability to handle multiple investments in one session is a feature that may be introduced in the near future to enhance user convenience.

Minimise Risk. Maximise Returns.

Don't invest unless you're prepared to lose all the money you invest. This is a high-risk investment and you are unlikely to be protected if something goes wrong.
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Risk Summary

Estimated reading time: 2 min

Due to the potential for losses, the Financial Conduct Authority (FCA) considers this investment to be high risk.

What are the key risks?

  • You could lose all the money you invest
  • Most investments are shares in start-up businesses or bonds issued by them. Investors in these shares or bonds often lose 100% of the money they invested, as most start-up businesses fail.
  • Checks on the businesses you are investing in, such as how well they are expected to perform, may not have been carried out by the platform you are investing through. You should do your own research before investing.

You won't get your money back quickly

  • Even if the business you invest in is successful, it will likely take several years to get your money back.
  • The most likely way to get your money back is if the business is bought by another business or lists its shares on an exchange such as the London Stock Exchange. These events are not common.
  • Start-up businesses very rarely pay you back through dividends. You should not expect to get your money back this way.
  • Some platforms may give you the opportunity to sell your investment early through a 'secondary market' or 'bulletin board', but there is no guarantee you will find a buyer at the price you are willing to sell.

Don't put all your eggs in one basket

  • Putting all your money into a single business or type of investment for example, is risky. Spreading your money across different investments makes you less dependent on any one to do well. A good rule of thumb is not to invest more than 10% of your money in high-risk investments. Learn more here.

The value of your investment can be reduced

  • If your investment is shares, the percentage of the business that you own will decrease if the business issues more shares. This could mean that the value of your investment reduces, depending on how much the business grows. Most start-up businesses issue multiple rounds of shares.
  • These new shares could have additional rights that your shares don't have, such as the right to receive a fixed dividend, which could further reduce your chances of getting a return on your investment.

You are unlikely to be protected if something goes wrong

  • Protection from the Financial Services Compensation Scheme (FSCS), in relation to claims against failed regulated firms, does not cover poor investment performance. Try the FSCS investment protection checker.
  • Protection from the Financial Ombudsman Service (FOS) does not cover poor investment performance. If you have a complaint against an FCA-regulated platform, FOS may be able to consider it. Learn more about FOS protection here.

If you are interested in learning more about how to protect yourself, visit the FCA's website here.

For further information about investment-based crowdfunding, visit the crowdfunding section of the FCA's website here.
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