78% tax relief on Seed Enterprise Investment Scheme (SEIS)

Following consultation on the future of venture capital schemes  (in which Gabelle participated), in his Autumn Statement the Chancellor announced the launch of a new SEIS from 6 April 2012.  The new legislation – expected in Finance Act 2012 – could give effective tax relief of 78% on gains reinvested in SEIS shares.

Where capital gains arising in 2012/13 are reinvested in SEIS the gains will disappear.  Together with the proposed income tax relief of 50% on the investment this gives 78% tax relief!

Draft legislation is expected next week, but if individuals are considering the sale of investments giving rise to capital gains, they should consider delaying the disposal if they intend to reinvest the proceeds into a seed business.

Part of the consultation process was determining the definition of seed-stage companies, which could range from a company that has not yet received any income, to a company that has gross assets of less than a specified amount. There has not yet been any further indication of what a seed-stage company will be, but it seems clear that we are looking at new companies.

This new relief will be paid for by freezing the CGT annual exemption at £10,600 for 2012/13.

For further information on the new legislation and on the reinvestment of gains generally please contact the TaxDesk on 0845 4900 509 and ask for Paul Howard