Tax holiday extended to encourage business investment

Through a Government incentive, for a further two years, individuals who invest in new companies operating qualifying small businesses, may be able to benefit from capital gains tax (CGT) relief.

The Seed Enterprise Investment Scheme (SEIS) was launched in 2012 to encourage people to invest in start-ups, by offering a range of income tax and capital gains tax reliefs for subscribing for new shares in these companies.

As an extra incentive, an investor who re-invests a capital gain of up to £100,000 made in 2012/13 in SEIS shares in the year, is able to claim CGT exemption on that gain.

It is now proposed to extend this re-investment relief for gains made in the tax year 2013/14.  Reinvestment relief of 50% of the matched gain will be available where the proceeds are invested in SEIS shares in either 2013/14 or 2014/15.

The Chancellor, George Osborne, announced these changes as part of his recent Budget plans, as the Government looks to encourage more investors to take advantage of SEIS and support new start-up businesses.

The scheme offers a range of tax reliefs, so anyone looking to invest in new businesses should seek professional advice as soon as possible if they wish to maximise on the tax breaks that might be available, while they remain in place.

For further information, please contact Stuart Hinnigan at the office.