The seed enterprise investment scheme (SEIS) will allow individuals who invest up to £100,000 per year in a new start-up business (up to a maximum cumulative investment in one firm of £150,000) to claim back income tax relief equal to 50% of the amount invested.

Invest in a small business in 2012 and claim 50% of your investment back

Any person looking at investing in a small business in 2012 should take serious note of the new Seed Enterprise Investment Scheme launched on the 06 of April 2012.

The seed enterprise investment scheme (SEIS) will allow individuals who invest up to £100,000 per year in a new start-up business (up to a maximum cumulative investment in one firm of £150,000) to claim back income tax relief equal to 50% of the amount invested.

You’re eligible for the 50% tax break regardless of the marginal rate at which you pay income tax. Further to the income tax relief an investors can also avoid paying capital gains tax (CGT) on any asset sold during the financial year 2012-2013 as long as they reinvest the proceeds in a SEIS eligible start-up in the same year.

Let’s look at a couple of examples (as per HMRC):

Example 1

Jenny invests £20,000 in the tax year 2012-13 (6 April 2012 to 5 April 2013) in SEIS qualifying shares. The SEIS relief available is £10,000 (£20,000 at 50%). Her tax liability for the year (before SEIS relief) is £15,000 which she can reduce to £5,000 as a result of her investment.

Example 2

James invests £20,000 in the tax year 2012-13 in SEIS qualifying shares. The relief available is £10,000, as above. His tax liability for the year (before SEIS relief) is £7,500. James can reduce his tax bill to zero as a result of his SEIS investment, but loses the rest of the relief available.

There is a 'carry-back' facility which allows all or part of the cost of shares acquired in one tax year to be treated as though the shares had been acquired in the preceding tax year. The SEIS rate for that earlier year is then applied to the shares, and relief given for the earlier year. This is subject to the overriding limit for relief each year. Please note that there is no SEIS rate for a year earlier than 2012-13, so there is no scope for carrying relief back before that year.

Posted by: BeanBalance
Last revised: 30 Apr, 2012 06:08 AM

Comments

Shelley Nitschke
Shelley Nitschke
16 Sep, 2017 06:02 AM

When you have no revel in of business, i'd be very wary of providing your cash to any other commercial enterprise person. I've seen too many partnerships crumble while one puts the cash in and the opposite takes it. Have you ever concept approximately investing in property alternatively? You may use Custom Assignment help the cash as a 25% deposit for a purchase 2 allow loan and feature a everyday profits out of your investment. Houses may be discovered at affordable prices at gift and there is a call for for condo. That way, you preserve control over your funding, you've got an profits from it and your initial funding will respect as soon because the marketplace steadies once more. If you do invest in someone else's enterprise, find a top accountant to check out why they need your funding, to calculate your likely return after which get a solicitor on board to attract up a legal agreement that is honest for each events. Even in case you locate a person who is a chum or relative, it is still very important to do that. The whole lot adjustments whilst money's concerned.

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