Investors to Get 50% Tax Relief from Start-Ups
As 6th April draws closer, and the government’s Seed Enterprise Investment Scheme comes into effect, there are plenty of would-be investors questioning whether it could be the vehicle for them to maximise their investment’s return. Investors tax relief does just that
On the face of it the numbers make SEIS extremely appealing – up to 50% income tax relief for anyone investing, and significant capital gains tax exemption particularly in the next tax year 2012/3. George Osborne is clearly keen to kick-start investment in new businesses and by giving these concessions he’s made it rather inviting for investors to push their money in that direction.
When explaining his rationale behind the scheme, the Chancellor told the Commons: “We've supported enterprise by increasing the generosity on the Enterprise Investment Scheme. Today, we are extending this scheme specifically to help new start-up businesses get the seed investment they need.
“Even at the best of times they can struggle to get the finance they need – and in the current credit conditions that struggle too often ends in failure.”
Ultimately, it makes investing in the business of a friend or relative that much less risky, while at the same time enabling entrepreneurs to attain enough financial backing to make a success of their new ventures, which, the government hopes, will be the foundation for a period of economic growth.
As with all things tax-related the government has had to make it complicated enough to minimise the risk of abuse of the system, and appear to have covered themselves with the associated legislation. It does mean, of course, that it is advisable to employ a good accountant to manage the tax element of this for you, but that would be the case with all investments and can’t really be considered a genuine barrier to entry.
If you are serious about investing in new businesses then SEIS could prove to be particularly enticing for those who are looking to maximise their returns