EIS or SEIS – offer generous tax reliefs but…

These are complex schemes, there are many pitfalls so we recommend you take nothing for granted!

When issuing EIS or SEIS shares ordinary shares must be subscribed for in cash and fully paid up at the time of issue. [Payment by capitalising an existing debt, for example, does not count as a cash subscription].

In order to qualify the company must be a trading company. This excludes the following: any kind of financial or property based trade, a company dealing in land, commodities, property development, hotels, nursing homes, farming and forestry.

There are various qualifying tests in order to obtain the income tax relief and there may be a withdrawal or reduction of relief if these are not met.

Also it is important to remember that monies raised from the issuing of the EIS/SEIS shares should be “spent” within two years and be employed for the purposes of the trade. We would advise that an additional account set up to demonstrate that it is these monies spent in this way and not working capital.

For more advice and how to benefit and not fall foul of the many pitfalls contact Winchester Bourne: by phone on 01962 715671 or email sarah@winchesterbourne.com