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In making a Seed EIS investment, having paid significant PAYE

Customer Question

In making a Seed EIS investment, having paid significant PAYE in past years, can I actually reclaim that or does the upfront tax relief only apply to tax not yet paid through self-assessment?
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.
Hello, I am Keith, one of the experts on Just Answer, and happy to help you with your question.
You get your tax relief by paying for your investment net. You can go back one year too to mop up unused contribution levels. Here is the Gov UK advice on the matter:
'The general rule is that the relief is available for the tax year in which the shares are issued. But if you choose, you can treat some or all of the shares as issued in the previous year and claim relief in that previous year, subject to the maximum £1 million relief limit for the year. You will find the date of issue of your shares recorded on form EIS3 or EIS5.'
Full details of the taxation of the schemes can be found here:
https://www.gov.uk/government/publications/enterprise-investment-scheme-income-tax-relief-hs341-self-assessment-helpsheet/hs341-enterprise-investment-scheme-income-tax-relief-2015
You can also go back a number of years to get tax relief if you invest in a Private Pension Scheme; have you considered that approach?
I do hope that I have been of assistance to you.
Customer: replied 1 year ago.

Thanks - how does the company then get the tax relieved element of the cash?

Expert:  bigduckontax replied 1 year ago.
It claims it back from HMRC as far as I am aware. You pay net, yet are credited gross.
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bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3367
Experience: FCCA FCMA CGMA ACIS
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Expert:  bigduckontax replied 1 year ago.
Thank you for your support.
Expert:  TonyTax replied 1 year ago.

Hi.

I just wanted to point out that you do not get tax relief for an SEIS investment by making your investment net of tax relief as you would with a personal pension contribution. Take a look here for information on how it works.

The whole point of SEIS is for small companies to use the investment to grow their businesses and if they had to wait to get some of the investment from HMRC, that would be ludicrous, frankly. I have dealings with an SEIS investment manager who vets applicant companies so I know how this works.

I hope this helps but let me know if you have any further questions.

Expert:  bigduckontax replied 1 year ago.
My original answer explained that the questioner obtained tax relief by paying contributions to the SEIS net of tax.
The matter of Personal Pension Plans as a way of further reducing his liability to tax was merely added as information additional to his query and was outside the scope of the question.
My final comments make it quite plain that additional information can be contained in my answers..

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