SEIS is targeted at small, young companies, so it’s quite restrictive. However in return it is the most advantageous in terms of the tax benefits on offer.
SEIS investors can get income tax relief equal to up to 50% of their SEIS investments (up to £100,000 annually). For example, if an investor invests the maximum £100,000 they will get £50,000 of tax relief. So, if they have other income that gives rise to an income tax bill of £75,000 in that year, this bill will be reduced to £25,000 by the relief. If the whole relief cannot be used in the tax year of investment, there is scope to carry it back to the previous tax year.
There are also capital gains tax (CGT) reliefs, namely (1) 50% of any amount invested in SEIS shares can be set-off against the taxable gain on a completely separate asset in order to reduce the tax on that separate asset, and (2) sale of the SEIS shares after three years is also generally free from CGT.