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.

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