Chancellor George Osborne has confirmed a new enterprise investment scheme offering investors 50 per cent income tax relief.
The Seed Enterprise Investment Scheme will start in April 2012 and investors will benefit from 50 per cent relief, regardless of their personal rate of income tax, offered on the first £100,000 of investment in a firm with each company eligible for up to £150,000 of investment in total.
It will be accompanied by a capital gains tax exemption for gains realised in the year 2012/13 where investors invest the gains into the new SEIS to encourage those sitting on profits from previous investment to put the money into new start ups paid for by freezing the capital gains tax threshold next year at £10,600.
Osborne said: “Today we are extending this scheme specifically to help new start up businesses to get the seed investment they need. Even at the best of times they can struggle to get the finance and in the current credit conditions that struggle too often ends in failure.”
“From April 2012, anyone investing upto £100,000 in a qualifying new start up business will be eligible for income tax relief of 50 per cent regardless of the rate they pay the tax. To get people investing in start up Britian in 2012, for one year ionly we will also waive any rtax on capital gains invested through the new scheme. We can afford this with a freeze on general capital gains tax threshold next year.
Oxford Capital Partners investment director David Mott says: “Angels will fly again following the Chancellor’s new Seed enterprise investment scheme proposals. The Chancellor’s proposals will really encourage new business start ups. By allowing 50 per cent income tax relief and capital gains tax relief of 28 per cent in 2012-13, people backing start up businesses will only be risking 22 per cent of the capital they invest in a start-up.”
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