Citywire printed articles sponsored by:
View the article online at http://citywire.co.uk/wealth-manager/article/a667359
Budget 2013: Osborne extends CGT holiday on Seed EISs
by Danielle Levy on Mar 20, 2013 at 13:23
George Osborne has extended the capital gains tax (CGT) holiday on seed Enterprise Investment Schemes.
In his Budget speech, the chancellor said he would extend the CGT holiday on seed enterprise investment schemes allowing any investors making capital gains in 2013-14 to receive 50% CGT relief when they reinvest those gains into seed companies in either 2013-14 or 2014-15.
In last year's Budget, the Treasury announced 50% income tax relief on investments made into small, early-stage companies. In its Budget statement for 2013, The Treasury said it hoped the recent expansions to Venture Capital Trusts (VCTs) and the Enterprise Investment Schemes, alongside the new Seed Enterprise Investment Scheme, would 'offer generous enterprise tax reliefs to support small and growing businesses'.
Jeremy Trent, tax partner at HW Fisher & Company, said: 'The extension of the CGT exemption under the Seed EIS scheme is good news, albeit we would rather have seen the maximum investments under Seed EIS being increased. While the limits remain low, this will have only a relatively minor impact on entrepreneurial activity.'
But Susan MacDonald, chair of Calculus Capital, warned that with the government's crackdown on tax avoidance, investors need to ensure the schemes they choose to invest in are genuine.
'The chancellor is determined to close tax loopholes and making it very clear that the only approved way to significantly reduce tax now is through Enterprise Investment Schemes and the more risky Seed EIS ventures, which help fuel economic growth,' she said. 'The tax benefits on these remain generous – up to £1m can be invested in an EIS vehicle with income tax relief at 30%, and up to 61.5% in loss relief. But the door is closing now on arcane schemes that simply seek to reduce an individual's tax bill without generating any upside for the wider economy.'
Osborne has also introduced new tax relief for social enterprise, stating that 'research and developent is central to the UK's future'. He also announced 10% tax relief on research and development.
News sponsored by:
Today's top headlines
More about this:
Aberdeen Live supplement: Fundamentals point to ongoing flows and solid returns from EMD
After a record year for inflows and market-leading performance in 2012, emerging market debt has taken a large step towards the mainstream. Our recent debate covers the outlook for the asset class this year and where opportunities can be found.
On the road
on May 24, 2013 at 11:32