The Seed Enterprise Investment Scheme (SEIS) has raised millions of pounds to help entrepreneurs realise their dream of starting a business.
At least 1,100 fresh firms have benefited from the government’s tax breaks for investors taking an equity stake in their business, according to the latest figures released by the Treasury.
A review of SEIS revealed private investors have pumped £82 million in to companies straight off the drawing board during the past 18 months.
Chancellor George Osborne, who claims SEIS is his brainchild, is described as ‘delighted’ with the take up, says specialist web site seis.co.uk.
The main aim for SEIS is to provide seed capital for high-risk businesses who find their access to bank funding blocked after lending rules tightened up as a result of the credit crisis.
The Treasury disclosed SEIS has provided an average £1.3 million of equity finance to around 20 start-ups a week since the start of the scheme in April 2012.
The attractions are obvious for companies and investors.
According to the website, “By offering an equity stake, start-ups are not taking on expensive borrowing which allows them to divert cash that would otherwise go on servicing loans into developing the business.”
The web site also lists the SEIS tax incentives, including:
- 50% relief on income tax paid up to the value of the investment, which is a maximum £100,000
- No capital gains tax made on profits made on investments via SEIS
- No capital gains on assets sold to raise cash for a SEIS investment of up to £100,000
- Loss relief to set off against other income should the SEIS business fail
Great for business
Osborne explains, “Hopefully people can see that Britain is a great place for business to start and raise finance. The rewards the seed investment scheme offers investors are as good or better than similar incentives available anywhere else.”
“Britain has a huge number of entrepreneurs struggling to bring their ideas to market because the banks have stopped providing them with finance. SEIS, combined with our start-up loans scheme and business angel fund will help fledgling businesses create jobs, wealth and opportunities that would otherwise not be there
“This is one of the foundations of the government’s economic plan to breathe life back into the economy.”