Investors can claim tax relief for the previous tax year, here's how
When you do a funding round, the investor sends you their money and gets their shares within a few days, so it's clear and unambiguous which date and tax year applies to their SEIS/EIS investment.
But, what happens in the case of an SEIS/EIS investment made via a SeedFAST, or any other Advance Subscription Agreement (ASA), where the investment may only convert into shares months later after the next funding round. Which data and tax year is the investment deemed to have been made in then?
The date that an investor's SEIS/EIS investment is deemed to have been made is always the day that they were issued their shares (it's important that you only issue them their shares after you've received their money, otherwise their investment could be deemed to be loan, and they won't get their SEIS/EIS).
This means that the tax year in which the SEIS/EIS benefit is given is the tax year when the SeedFAST or ASA conversion occurred (usually when the funding round took place), not the tax year in which the SeedFAST investment was made.
At this point you're thinking... oh, that's bad, it means the investor does a SeedFAST with me now, and I don't do a new funding round (when the SeedFAST will convert into shares) until sometime in the next tax year, my investor won't be able to claim SEIS/EIS for this tax year, which is going to make them a lot less likely to invest.
While that's true - they can only file their SEIS/EIS claim in the tax year in which their shares were granted - the good news is that HMRC allow you to backdate the claim to the previous tax year .
So, you can assure your investor that if they make an investment in your company via a SeedFAST today, even if that SeedFAST only converts into shares in the next tax year, they'll be able to retrospectively claim an SEIS/EIS tax deduction then, for this tax year.