Son of EIS?

SEIS (not Son of EIS but Seed Enterprise Investment Scheme) is one of the new measures trailed in the Chancellor’s Autumn Statement with more detail in today’s draft Finance Bill 2012.

Aimed at start up companies, the new scheme starts for investments made on or after 6 April 2012 and will run in parallel with the existing EIS scheme and for the first year will give tax reliefs (including a year one capital gains tax holiday on gains made in 2012/13 and reinvested in the same year) up to a very attractive 78%. This will help attract early stage investment into what has always been a risky area.

As always, the new relief comes with a lengthy list (47 pages in the draft Bill) of qualifying conditions, which is where good advice will pay dividends whether you are a potential investor or looking for outside investors for your business. In particular, the investment must go in as eligible shares, the company must have been incorporated in the two years before the investment, have 25 or fewer employees and assets of no more than £200,000, an investor can put in up to £100,000 a year, but the overall limit for a company is a cumulative £150,000.

But it will be worth all the effort of going through the hoops for an income tax benefit of 50% and the one off capital gains tax break for next tax year.

For more information contact Mike Hodges.