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This update was first published in the April 2012 UK edition of Accounting and Business magazine.

The Seed Enterprise Investment Scheme (SEIS) has been described as a specialist tool aimed at helping a small group of investors and entrepreneurs develop businesses that might otherwise never gain funding. It can be used by companies seeking to raise finance which have fewer than 25 full-time employees, excluding directors, at the time when the relevant shares are issued.

The scheme is not permanent, but relates to shares issued from 6 April 2012 until 5 April 2017. It is only available to individual investors in very small companies, and is not available to investors in partnerships or limited liability partnerships. The investment limit for a qualifying individual in a fiscal year is £100,000.

However, they cannot claim tax relief until the company has spent at least 70% of the money invested. The individual must not be an employee of the company from the date of incorporation of the company until at least three years following the issue of the shares. A director is not an employee for this purpose.

Glenn Collins, head of technical advisory, ACCA UK

Last updated: 1 Oct 2014