Prepared by Gary Green ACA 23 April 2013
Seed Enterprise Investment Scheme (SEIS) Carry-Back Relief This article will set out the potential opportunities available in regard to carry-back relief under Seed Enterprise Investment Scheme (SEIS) legislation. The SEIS is Chancellor George Osborne’s brainchild to get small businesses and entrepreneurs the funding they need and consequently, boost the economy. Investors can obtain generous income tax and capital gains tax (CGT) breaks for their investment. On 29 November 2011, the Chancellor, George Osborne, announced the arrival of a junior version of EIS to be known as Seed Enterprise Investment Scheme which arrived on 6 April 2012. The key features of the reliefs are:
a qualifying investor will be able to invest up to £100,000 into qualifying companies in a tax year receive income tax relief of 50% on the sum invested unused relief in one tax year can be carried back to the preceding tax year if there is unused relief available for that year
Example 1 Susan is a lawyer paying taxes at the top rate and invests £130,000 via SEIS during 2012/13 Susan invests £50,000 via SEIS during 2013/14 As Susan has not used £50,000 of the £100,000 limit in 2013/14, she can carry back the surplus to the previous year. Therefore, she may obtain full income tax relief for both years. This means she will get a tax account deduction of up to £90,000 over the two years, being 50% x (£130,000 + £50,000)