5 Ways SEIS Relief Benefits Investors

| April 30, 2015 | 0 Comments

investment-opportunities

When the UK government created SEIS it made it a lot easier for UK companies to get the funding they needed to get ideas off the ground. Additionally, it was also a very attractive prospect for investors, offering notably good tax breaks and a win-win scenario.

We often hear about the notable benefits of SEIS for companies that receive the funding, however with the help of keybusinessconsultants.co.uk let’s take a closer look at the positives for investors.

Income Tax Relief

Under SEIS the level of income tax relief that can be deducted from a person’s tax bill can be up to 50% on an annual investment limit of £100,000. The tax system allows spouses and legal partners to contribute up to the limit above – something very enticing for a lot of investors.

Capital Gains Tax Relief

When a SEIS investment is sold on, the individual that invested in the company through SEIS will receive a tax free capital gain on any increase in the worth.

So, consider the following scenario: John has sold an investment and realised a taxable gain of £100,000. John has already used his annual CGT exemption. John is a top rate taxpayer and is looking to defer the £28,000 CGT liability, so he decides to re-invest his gain and £100,000 is invested into SEIS/EIS qualifying companies on his behalf. The £28,000 CGT liability is not payable until the shares which John subscribed for with his £100,000 are disposed of.

CGT Removed from any Gains Made

If someone investing has made a gain on the disposal of an asset within a 12 month period before the investment, 50% of the amount of tax to be paid on this gain can be removed completely to the end that the gains is invested in shares that qualify for SEIS and an allowed claim is made during the tax year during which the investment is made.

Inheritance Tax Relief

An SEIS investment will qualify for 100% business property relief from Inheritance Tax Relief if it has been held for two years or over and still are held at the time of death and are still unlisted. The result of this is that the value of the shares will end up falling outside of the investor’s estate and so it will not be taxable under inheritance tax.

Loss Relief

If the investor makes a loss on an investment in an SEIS qualifying company the loss can be off-set against the current income tax the person owes for that year, or can be brought back to the previous year. Instead, the loss can be offset against a person’s CGT during the tax year that the disposal arises or if it is not fully used it can be offset against gains from a prior year. This tax relief is available during any period and in respect of any loss due to the shares in a SEIS qualifying company on which SEIS income tax relief or capital gains tax deferral relief has been offered and not withdrawn.

SEIS can have notable benefits for investors as well as for companies and if you wish to get in touch with someone to talk about it then Key Business Consultants can be of help.

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