If you are waiting to invest in the Seed Enterprise Investment Scheme (SEIS), then Chancellor George Osborne’s timing for Budget 2015 could leave you out in the cold.
To date, he has dropped no hints about tax breaks for startup investors next year – but he has progressively reduced the incentives since SEIS started in April 2012.
In the first year, deferred capital gains tax reliefs on the sale of assets to raise cash for a SEIS investment were 100% – then this dropped to 50% last year.
For investors planning a SEIS swoop, the Budget 2015 date of March 18 gives only 16 days to the end of the financial year to make an investment as the tax year turns on the Easter bank holidays.
The dilemma is will the Chancellor keep the attractive SEIS tax breaks as they are for next year or will they change?
Taking a gamble and waiting to invest could mean missing out on lucrative tax breaks this tax year.
The decision particularly affects savers who have ploughed cash up to their ISA and pension limits already this tax year as SEIS is the next obvious place to look for tax-effective investment, writes Stuart Smith of specialist web site SEIS.co.uk
“SEIS offers more risk than more conservative ISA and pension investments,” said <name>. “However the tax breaks are the most generous in the UK tax system in recognition of that risk.
“Another bonus is investing in a SEIS has no tax come back on investments in an ISA or pension.”
Another issue for investors is timing, explained <name>.
“The first SEIS investments were made shortly after April 6 2012 and the contracts last three years, which means the first SEIS will be emerging in the new tax year,” <he/she> said.
“For the first time this gives investors a chance to see how SEIS startup companies have performed, but the data is likely to lag real time by some while, leaving everyone in the dark possibly until Christmas 2015.”
HMRC figures show at least 7,500 investors have staked £85 million against shares of 1,120 SEIS startup companies since 2012.
