The chancellor’s autumn statement was generally dull from a tax point of view, says Carl Bayley in Business Tax Saver, but there was one “bit of excitement”: the seed enterprise investment scheme (SEIS). The details are yet to be revealed, but its benefits could be “significant”.
It will apply from 6 April 2012. It will offer income-tax relief at 50% to individuals, regardless of their marginal tax rate, who invest up to £100,000 per tax year in qualifying companies. And if you reinvest a capital gain in SEIS shares during the same tax year, it will be “completely exempt” from capital gains tax.
So if you had a total taxable income of £100,000 for 2012/2013, your income tax bill would be £29,884 – a bill that you could eliminate by investing £59,768 in qualifying SEIS shares. If you can fund that investment via a big enough capital gain – say of £70,638 – £59,768 of those gains would be exempt from CGT, leaving £10,600 covered by your annual exemption. The CGT saving of £16,735 means that the net cost of that £59,768 investment is £13,149.