Income Tax Act 2007 section 257BB

The no substantial interest in the issuing company requirement

Section 257BB requires that an investor claiming Seed Enterprise Investment Scheme (SEIS) relief must not have a substantial interest in the company issuing the shares at any point during the relevant qualifying period (known as period A).

• The investor must not hold a substantial interest in the issuing company at any time during period A
• A substantial interest means having more than a 30 per cent stake in the company, whether through ordinary share capital, issued share capital, voting power, or rights on a winding up
• Having control of the company also counts as a substantial interest, even if the 30 per cent threshold is not met through shareholding alone
• This requirement ensures that SEIS relief is directed at genuine outside investors rather than those who already hold significant influence over the company