Which of the following is a characteristic of the retention period for income tax relief in SEIS?

In the context of the Seed Enterprise Investment Scheme (SEIS), the retention period for income tax relief is a critical aspect of the scheme designed to encourage investment in small, high-risk companies. The correct choice highlights that the income tax relief under SEIS is withdrawn if the shares are sold within three years of the investment. This means that for investors to benefit from the tax relief, they must hold onto their shares for a minimum of three years.

The three-year holding period ensures that investors are genuinely committed to supporting the company rather than making short-term financial gains. This retention requirement aligns with the scheme's goal of promoting longer-term investment in early-stage companies, which often require sustained funding to develop and grow.

The other options do not accurately describe the terms of the SEIS retention period. Relief is not permanent and can be lost if shares are disposed of within the specified timeframe (the temporary nature of the relief is inherent in option B). Therefore, the focus on maintaining the investment for three years is essential to retaining the income tax relief granted under this scheme.