Tax Efficient Investment Schemes

The Government has decided to overrule the sunset clauses for both the Enterprise Investment Scheme (EIS) and the Venture Capital Trust (VCT) scheme, which were both due to end by 6 April 2025.

The similar Seed Enterprise Investment Scheme (SEIS), designed for early stage trading companies, will be expanded.

The amount each investor can subscribe for new shares under the SEIS will be doubled to £200,000 per year from 6 April 2023. This would give an investor, who puts up the maximum amount in one year, £100,000 of income tax relief. The shares acquired are also free of CGT if they are held for at least three years and the income tax relief is not withdrawn.

SEIS also offers CGT reinvestment relief at the rate of 50% of the amount of gain reinvested in SEIS shares, if the investment is made within the same tax year as the gain was realised. However, the gain must be real gain, not a deemed gain, or a gain which has been held-over or deferred. To benefit from reinvestment relief the taxpayer must also claim the income tax relief on the subscription for the shares.

The cap on the amount for the company can raise under the SEIS will also be increased from £150,000 to £250,000. The gross assets cap for companies using the SEIS will be also be increased from £200,000 to £350,000.

Currently such companies must be within two years of starting their trade when they receive funds under SEIS, this age limit will be extended to three years



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