The draft financial services bill has seen the confirmation of the seed enterprise investment scheme (SEIS), announced during last week’s autumn statement by chancellor George Osborne.
The SEIS will focus on smaller early stage companies “carrying on, or preparing to carry on, a new business in a qualifying trade”.
Tax relief will be available for investors with a stake of less than 30% in the company, and has been designed to help “smaller, riskier, early stage UK companies”.
The new scheme will apply to smaller companies with 25 employees or fewer with assets of up to £200,000.
Income tax relief worth 50% will be applied to individual investors with a sub-30% stake in the SEIS, up to an annual £100,000 per investor. Unused annual allowances will be able to be carried back to a previous year.
Exemption for capital gains tax (CGT) for gains on shares will be introduced, while exemption of CGT for gains on disposals during 2012-2013 will be sought where proceeds are reinvested.
Relief will apply to shares issued on or before April 6, 2012.
The scheme is set to cost the exchequer £50m in 2013-2014, £25m in 2014-2015, and £20m in each of the two subsequent years.
According to an impact summary, the Treasury believes the products will appeal to the current investor profile of existing venture capital trust (VCT) and enterprise investment schemes: “Male, located in the south of England” and with “higher overall income levels”.
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