Who is likely to be affected?
early stage companies raising equity, and individuals investing in such
description of the measure
measure introduces a new tax-advantaged venture capital scheme, similar to the Enterprise Investment Scheme
scheme – the Seed Enterprise Investment Scheme (SEIS) – will be
focused on smaller, early stage companies carrying on, or preparing to
carry on, a new business in a qualifying trade. The scheme will make
available tax relief to investors who subscribe for shares and have a
stake of less than 30 per cent in the company.
relief will apply to investments made on or after 6 April 2012.
first year of the new scheme, the Government will offer a capital gains tax (CGT) holiday
– gains realised on the disposal of assets in 2012-13 that are invested through
SEIS in the same year will be exempt from CGT.
measure will support the Government's growth agenda by helping smaller,
riskier, early stage UK
companies, which may face barriers in raising external finance, to
attract investment, making it easier for these companies to be established
and to grow.
Background to the measure.
Government announced at Budget 2011 that it would bring forward proposals to
support investment in smaller, early stage companies. A consultation
document, Tax-advantaged venture capital schemes: a consultation was
published on the Treasury website on 6 July 2011 setting out in detail a
number of design issues concerning the new scheme. The Government's
consultation response document was published on 6 December 2011.
relief will apply to shares issued on or after 6 April 2012.
legislation is in Part 5 of the Income Tax Act (ITA) 2007. Sections 150A
and 150B of the Taxation of Chargeable Gains Act 1992 make provision for exemption from capital gains tax of gains on disposals of shares in
companies within the scope of the EIS. Schedule 5B of that Act
provides for deferral of gains on disposals of assets where those gains
are reinvested in shares under the EIS.
will be included in Finance Bill 2012 to provide for a new tax advantaged
venture capital scheme. This will:
to smaller companies, those with 25 or fewer employees and assets of up
which are carrying on or preparing to carry on a new business;
income tax relief worth 50 per cent of the amount invested to individual investors with
a stake of less than 30 per cent in such companies, including directors who
invest in their companies;
to subscriptions for shares, using the same definition of eligible shares as
EIS (which it is proposed will be widened in Finance Bill 2012);
to an annual amount of investment of £100,000 per investor, with unused
annual amounts able to be carried back to the previous year, as under EIS;
for relief within an overall tax favoured investment limit of £150,000 for
the company. To give the greatest degree of flexibility, this will be a
cumulative limit, not an annual limit;
for an exemption from CGT on gains on shares within the scope of the
for an exemption from CGT on gains realised from disposals of assets
in 2012-13, where the gains are reinvested through the new SEIS in the
95. If you have any questions
about this change, or comments on the legislation, please contact Kathryn
Robertson on 020 7147 2589 (email: firstname.lastname@example.org) or Des
Ryan on 020 7147 0818 (email: email@example.com).
Clean up your Act, Chancellor !!
SEIS Act has more than 60 pages of proposed exceptions & conditions.
e.g. 70% Seed EIS capital subscribed must be spent BEFORE tax relief is claimed
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