Budget 2013: Seed Enterprise Investment Scheme (SEIS) changes a boost to investors

The capital gains tax relief applied to gains realised in 2012/13 and invested in the same tax year or 2013/14 and ‘carried back’. The Chancellor confirmed that the relief on half of the capital gains money reinvested in a start-up will now also apply to gains made in 2013/14.

Launched last year, the Seed Enterprise Investment Scheme (SEIS), like a number of government schemes, has taken some time to gain traction, in spite of the highly attractive tax incentives on offer to angel investors. Combined with income tax relief business angels can gain a tax relief of up to 78% on an investment of £100,000.

The changes were universally welcomed, Derek Uittenbroek, co-founder and CEO of FundTheGap said: “We are delighted to find out that the Seed Enterprise Investment Scheme (SEIS) capital gains tax holiday has been extended – offering investors a further 28% tax relief on their investments in seed and start-up stage businesses.  This will continue to ensure that innovative start-ups in Britain have access to the private funding they need to get off the ground.

Katharine Arthur, Tax Partner at MHA MacIntyre Hudson, agreed, and also welcomed the extension by saying: “we have seen a great deal of interest in SEIS and the broader Enterprise Investment Scheme, encouraging investment in smaller businesses. Extending the timeframe in which gains can be reinvested and still be exempt from capital gains tax gives added flexibility and encourages further reinvestment in young businesses.”

The Cnahcellor also confirmed the removal of a clause relating to the control of an SEIS investee company by another company, which was intended to protect but confused matters as a defect in the SEIS drafting meant that this restriction applied from the date of incorporation.

This meant that if a company was formed by a formation agent that was itself a company, and which then owned the subscriber shares, SEIS relief was precluded forever. This change applies to shares issued on or after 6 April 2013 and its removal manages an awkward defect in the legislation that has given the business angel community a few practical difficulties.


Paul Jones

Business Matters Editor

About Paul Jones

Business Matters Editor