ACCA Advanced Taxation (ATX) Practice Exam

What is the maximum income tax relief amount on a SEIS investment?

1. £50,000

2. £100,000

3. £300,000

4. £60,000

The correct answer is: £50,000

The maximum income tax relief amount available on a Seed Enterprise Investment Scheme (SEIS) investment is £50,000. This relief is designed to encourage investment in small, high-risk companies, providing tax benefits to investors. Specifically, taxpayers can claim an income tax relief of 50% on the amount invested in SEIS-eligible shares, up to the limit of £50,000 in any tax year. Therefore, if an investor puts in £50,000, they can obtain a relief of £25,000 against their income tax liability. It's important to note that while SEIS offers substantial tax relief, the caps on relief are set at these specific levels to balance between encouraging investment and managing the financial implications for tax revenues. Other thresholds and caps apply under different investment schemes, such as the Enterprise Investment Scheme (EIS), which has a higher relief cap of £100,000. However, within the context of SEIS, the £50,000 cap is definitive for individual investors, making it a crucial point for anyone considering SEIS investments.