Tax efficient investment for start-ups and growing companies
Small businesses are the economic engine of the UK, however small companies are often starved for cash. To provide an incentive for investors, the UK Government has provided a number of tax reliefs which can provide investors more of an incentive to invest in small companies. Depending on the age and size of the business investors may be eligible for relief under:
- Seed Enterprise Investment Scheme (“SEIS”); or
- Enterprise Investment Scheme (“EIS”)
There are certain differences to each scheme but primarily an investor under both arrangements an investor will receive an income tax reduction of either 30% or 50% of the amount invested. So for EIS if an investor acquire £10,000 worth of shares, an investor could claim a deduction of £3,000 (£10,000 x 30%) against their income tax liability.
How we can help?
Due to these favourable tax reliefs, the legislation is often complicated with lots of pitfalls. At Huw John & Co. we can provide advice on whether SEIS or EIS is suitable for your company and guide you though the process of seeking clearance from HMRC together with compliance requirements for investors.