With the ongoing crack down on tax avoidance set to increase the Government’s tax take, UK tax payers could be forgiven for hoping for additional tax reliefs from today’s Budget statement.
One small nod in that direction has come in the form of an extension to the capital gains tax reliefs available to investors in small, early-stage companies. The aim of the Seed EIS scheme, introduced in 2012, is to incentivise private sector investment and entrepreneurship. The scale of the relief is relatively small but should serve to encourage further take up of this scheme in the coming tax year.
David Kilshaw, tax partner at KPMG, said: “This is a small step but at least a step in the right direction. With traditional forms of start-up capital harder to come by in the current climate, it is right that the tax system incentivise private finance for new businesses and encourage growth”.
Notes to editors:
Seed EIS was introduced in 2012 to help small companies raise equity finance by offering various tax reliefs to investors in new shares in these companies. SEIS runs alongside the Enterprise Investment Scheme (EIS). SEIS offers tax relief at a higher rate than that offered by EIS, recognising the difficulties that very early-stage companies may have in securing early investment to help the business grow.
SEIS offers income tax relief to investors of 50% of the cost of the shares up to a maximum investment of £100,000, as well as CGT relief on chargeable gains accruing to an investor in 2012-13 where the gain is reinvested in shares qualifying for SEIS income tax relief. The amount re-invested was exempt from CGT.
Today’s budget has extended that CGT re-investment relief for gains arising in 2013-14 which are reinvested into SEIS shares (provided that the gains are reinvested in 2013-14 or 2014-15).
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