Which tax advantage is provided by the Seed Enterprise Investment Scheme (SEIS)?

The Seed Enterprise Investment Scheme (SEIS) provides a range of tax advantages designed to encourage investments in small and early-stage businesses. The option indicating tax relief on losses from investments is correct because SEIS allows investors to offset potential losses against their income, which can help reduce the overall tax burden. This provision is particularly beneficial for investors looking to support startups, as it mitigates the risk associated with investing in high-risk ventures.

Investors are often drawn to SEIS for the potential to gain substantial income tax relief on investments made, as well as possible capital gains tax exemptions on future profits. However, the specific focus here is on the ability to claim relief on losses, which sets it apart from the general benefits of capital gains tax exemption or broad income tax deductions. In essence, SEIS enhances the attractiveness of investing in startup companies by providing a safety net in the event of underperformance, thereby encouraging more individuals to consider investing in these high-potential but often volatile markets.