Tax advice of the week: Seed scheme is worth a look
Tax relief makes the new Seed Enterprise Investment Scheme (SEIS) attractive. But act fast before the taxman changes his mind.
The taxman's new Seed Enterprise Investment Scheme (SEIS) applies from 6 April 2012 and offers 50% income tax relief to "individuals investing up to £100,000 per tax year in qualifying companies", says Carl Bayley in Business Tax Saver. This is not dependent on the individual's marginal tax rate so most investors will simply see their tax bill halved.
Better yet, "where a capital gain arising in 2012/2013 is reinvested in SEIS shares during the same tax year, it will be exempted from capital gains tax". This means investors could get up to 78% tax relief in total, leaving just 22% of your investment exposed to the inherent risk of investing in a small firm.
The scheme is targeted at start-ups and "there is a cumulative limit of £150,000 for the total amount" raised by a firm under the scheme. Investors can be directors but not employees. They can't hold, "nor be entitled to acquire, an interest of more than 30%" in the firm's share capital. Despite other restrictions, the tax relief makes SEISs worth a look. But act now, says Tax Tips & Relief, while the tax breaks are generous.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Sign up for MoneyWeek's newsletters
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
-
8 of the best houses for sale with annexes
The best houses with annexes – from a period property in the Lake District to a 13th-century house with a two-bedroom annexe in Saltwood, Kent
By Natasha Langan Published
-
Zelenskyy moves to appease Donald Trump – what happens now?
Ukraine’s president Volodymyr Zelenskyy is conceding ground to secure the least-worst deal possible, says Emily Hohler
By Emily Hohler Published