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Topic: Elections and claims

SEIS reinvestment relief claim
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SEIS reinvestment relief claim

SEIS reinvestment relief claim

If you make a qualifying gain by investing in certain companies, you could enjoy a capital gains tax exemption.

Gains

Capital gains tax is payable when chargeable assets are sold, or otherwise disposed of, for proceeds or deemed proceeds that exceed their base cost. However, the seed enterprise investment scheme (SEIS) offers the opportunity to exempt, rather than just defer, some gains through reinvestment relief. This works by matching up to 50% of your qualifying investment. The allowable amount is capped at 50% of the gain though, even if 50% of the investment is more than that amount.

Timing

For SEIS reinvestment relief, the gain must arise in the same tax year that income tax relief is claimed. This can cause issues if the income tax relief is carried back to the previous year, e.g. because there isn’t enough income tax liability to utilise the relief. The carryback will restrict the amount you can match.

Procedure

You can claim relief on your tax return, but you can’t do this until you receive your SEIS certificate from the company. If you have already sent your return, you can either amend it or send the claim in writing using the form that comes with the certificate. Use our template letter to accompany this and make it clear to HMRC which gains you are exempting.

The time limit for making a claim is the fifth anniversary of 31 January following the end of the tax year the claim will relate to, e.g. by 31 January 2025 for a claim in relation to 2018/19.

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