The Venture Capital Schemes (and SEIS, EIS and VCT in particular) are government initiatives designed to assist small to medium sized enterprises.
They achieve this by providing the tax incentives summarised below to investors in qualifying companies. It should be noted the income tax relief is given as a tax reclaim, and it is therefore limited to tax paid or due. Income tax relief is available to investors who have a UK income tax liability against which to set the relief; investors do not need to be UK resident. These tax incentives enhance the returns and help to reduce risk to investors’ capital. However, investors must consider the investment risks and opportunities before they decide to invest and should seek advice from a financial adviser.
| EIS | SEIS | VCT | |
|---|---|---|---|
| Upfront Income Tax Relief | up to 30% | Up to 50% | up to 30% |
| Annual limits 2023/24 | £1m + carry back allowed1 | £200k + carry back allowed2 | £200,000 |
| Tax Free Exit | Yes | Yes | Yes |
| Capital Gains Relief | Up to 28% deferral3 | Up to 14% saved3 | Nil |
| Tax Free Dividends | No | No | Yes4 |
| IHT Free | Yes (after 2 years)5 | Yes (after 2 years)5 | No |
| Share Loss relief | Yes | Yes | No |
| Minimum Holding Period | 3 years | 3 years | 5 years |
1 increased to £2 million for investments made on or after 06 April 2018 provided that any amount over £1 million is invested in “knowledge-intensive” companies
2 for SEIS share issues on or after 06 April 2023, the annual investor limit was increased to £200,000 from the previous limit of £100,000
3 depending on the nature of the asset and the date of disposal
4 Dividends from VCTs are tax free as long as the shares are acquired within the permitted annual maximum allowance of £200,000 in any one tax year
5 the value of the shares may qualify for 100% business relief (BR) from inheritance tax (after a minimum two-year holding period, unless the shares are “replacement business property”)
For further details of the investment risks please see the Key Risks section of this website. Tax treatment is dependent on the circumstances of each individual and may be subject to change in the future.