It’s time for Chancellor Phillip Hammond to take a long hard look at the Seed Enterprise Investment Scheme in his Budget 2018.
SEIS was launched in April 2012, and although some minor changes have taken place, the investment wrapper remains much as designed from the start.
If Hammond looks under the bonnet, the major tweak he could make is the investment cap.
Business angels can plough £100,000 a year into SEIS companies in return for a 50% income tax repayment up to £50,000.
Some investors could argue that this cap is too low and that more companies could benefit from a higher investment ceiling. After all, a start-up can burn through £100,000 quickly in today’s cash-intensive business environment.
Lure of tax breaks
The investment cap has remained firmly in place since day one and surely would benefit from a boost.
The change would also encourage high-earners awash with cash that they cannot stash into a pension to divert the money to SEIS.
The rumour is pension tax breaks may be slashed for high earners in Budget 2018, so why not give these business angels somewhere else to park their money with the lure of tax breaks?
Hammond has his chance on Monday, October 29, when he makes his Budget 2018 speech in Parliament.
Instead of taking away, he has the chance to give a break to entrepreneurs and investors.
Bridge the investment gap
Lifting the lid on SEIS investing is surely an easy way to do this without impacting the flow of tax revenue into the Treasury coffers.
The business angel market is comparatively small – estimated at around 15,000 wealthy individuals mainly living in and around London by the UK Business Angel Association.
And the jump between SEIS investment levels and those of big brother the Enterprise Investment Scheme (EIS) is huge – £100,000 a year for SEIS and £1 million for EIS. Something in the middle to bridge the gap would not go amiss with investors.
So come on Phil, get your spreadsheets out and take a look at improving SEIS in Budget 2018.
Find out more about SEIS
You can download a copy of the SEIS Guide here. The guide is divided into a section aimed at investors, and one targeting entrepreneurs. It is the first port of call for those looking to enter into a scheme which has seen incredible growth in popularity in the last few years.
The guide is downloadable from SEIS.co.uk , and provides an easily digestible source of vital information for anybody who could benefit from the scheme.