Chancellor announces major new tax relief for seed stage investing

29 November 2011

Chancellor George Osborne’s Autumn statement today announced a major new tax relief of 50% for investing in seed stage businesses called SEIS. The Chancellor announced:

The introduction of the new Seed Enterprise Investment Scheme (SEIS), commencing from April 2012, to encourage investment into new early stage companies.  This is the ‘BASIS’ proposal that was set out in the consultation we carried out earlier this year.  The details of the scheme are as follows:

-          SEIS will be similar in design to the current Enterprise Investment Scheme (EIS) but will focus on new early stage companies which are carrying on or preparing to carry on a new business.

-          SEIS will provide income tax relief of 50% for individuals who invest in shares in qualifying seed companies, with an annual investment limit for individuals of £100,000 and cumulative investment limit for companies of £150,000.

-          Eligible companies will need to have 25 or fewer employees and assets of up to £200,000 at the point of investment, and must be undertaking a new business.

 

In order to give the new scheme a kick-start, the Chancellor also announced a one year CGT exemption for any gains made on the disposal of assets in 2012-13, and then invested through SEIS in the same year.

In addition, the Autumn Statement also includes some (brief) details of the Government’s decisions on refocusing and simplifying EIS and VCTs following the consultation earlier this summer.  The Government has decided to:

           ·          Remove the £1m limit on investment by a Venture Capital Trust (VCT) in a single company (except for companies in a partnership or a joint venture) with effect from 6 April 2012 (this was not part of the consultation, but the decision has been taken in order to simplify and help to reduce burdens associated with VCT investments).

           ·          Simplify EIS rules as set out in the consultation document, to replicate the definition of eligible shares currently used for VCTs and to reform the connection rule regarding bridging loans.

           ·          Tighten the focus of the schemes by introducing a new test to exclude companies set up for the purpose of accessing the relief, exclude acquisition of shares in another company and to exclude investment in Feed-in-Tariffs businesses.

Next week, the Government will publish the formal response Consultation Response Document, and draft Finance Bill 2012 legislation, which will set out in much greater detail the announcements mentioned here.  The Finance Bill legislation will then be open to consultation for 12 weeks, and we would welcome your comments on this to ensure that the policy objectives set out here are supported with effective legislation.

 

For details of the Autumn Statement (http://cdn.hm-treasury.gov.uk/autumn_statement.pdf

London Business Angels
Anthony Clarke, Managing Director
Tel: +44 (0)20 7321 5672
E-mail: enquiries@lbangels.co.uk
Web: www.lbangels.co.uk

About London Business Angels

LBA is one of the most experienced private angel networks in the UK. Since the early 1980s the network has been connecting innovating fast growth small and medium sized enterprises with investment through our network of business angel investors. LBA, part of Angel Capital Group, is professionally managed by a highly experienced management team, leveraging over 15 years’ experience in the early stage investment marketplace as established leaders in the development of new angel-led early stage investment initiatives, and nearly 30 years’ investing experience through the LBA network. LBA is a founding member of the British Business Angels Association, the industry's best practice trade association, and is also a member of EBAN, the European Business Angels Network.

About the LBA EIS/SEIS Approved RoundTable Syndicate Funds

The LBA EIS Approved RoundTable Syndicate Fund is the culmination of 30 years’ experience of pioneering innovation in the UK Angel investment market. This FSA regulated HMRC Approved EIS Fund offers LBA Investors an innovative way to acquire a portfolio of investments, while taking advantage of the personal tax relief offered by the Enterprise Investment Scheme. The First £300k LBA EIS RoundTable Fund 2010 was fully invested in January 2011, making four investments in leading edge technologies during the previous year, spread across a range of sectors: Eykona (medtech); Syrinix (cleantech); ipadio (mobile); The Electrospinning Company (nanotech).

Following the successful 2010 Fund, the LBA EIS Approved RoundTable Syndicate Fund 2011-12 closed for subscriptions on 13 May 2011, being 40% larger at £420k. The fund invested in 5 leading edge technologies spread across a range of sectors: Camstent (medtech), Momentum Bioscience (medtech), Phase Vision (high value manufacturing), Michelson Diagnostics (medtech), Isotera (cleantech)

The LBA EIS Roundtable Syndicate Fund 2012, closed for subsciprtions on 5th April 2012 at £455k. The fund invested in 6 early stage companies.

The LBA EIS Roundtable Syndicate Fund 2013, closed for subscriptions on 5th April 2013 at £290k. The fund invested in 6 early stage companies.

The LBA EIS Roundtable Synducate Fund 2014 closed for subscriptions at £695k on 4th April 2014. The fund will seek to co-invest alongside London Business Angels in the next 12 months

The LBA SEIS Roundtable Syndicate Fund 2012, closed for subscriptions on 19th October 2012 and will seek to co-invest across 6-7 SEIS eligible deals alongside LBA investors