Business
How the taxman could leave you astonished
18th January 2012
Michael Brooke, of Ross Brooke Chartered Accounts, explains the new seed enterprise scheme
An “astonishing” tax relief. This is how a number of commentators are describing the seed enterprise investment scheme (SEIS) announced in the autumn statement and effective from April 2012, reports Michael Brooke, of Ross Brooke Chartered Accountants.This scheme is aimed at start-up businesses, (including those less than two years old), which want to raise up to £150,000 and which carry out a genuine new trade.
The company must have less than 25 employees and less than £200,000 in gross assets.
In return for the investment, an investor can claim back income tax equal to 50 per cent of the investment and potentially shelter capital gains made in the same year saving up to a further 28 per cent.
In other words, an investment of £100,000 could actually cost you as little as £22,000. Investors can include founder directors providing they own no more than 30 per cent of the share capital.
Of course investing in a new business can be a risky venture. There are various statistics thrown around including a BBC survey last year that 80 per cent of start-ups end in failure but these perhaps exaggerate the problem.
Big failures are often a result of too much capital but small failures are often a result of too little.
An investor in a small start-up can often bring additional skills such as marketing, planning and even accounting to the party and help eliminate many of the common causes for failure.
Here at Ross Brooke we believe that this scheme and the overall shift in strategy towards entrepreneurship is a great opportunity for new businesses in Newbury.
We are actively seeking to bring investors and start-ups together and work closely with them to create real value.
And, if successful, shares in a SEIS after two years can be exempt from CGT and IHT.
n If you would like to comment on this article please visit www.ross-brooke.co.uk/forum/rb17
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