The tax breaks for start-ups and entrepreneurs have a sunset clause, which required new legislation to extend the reliefs.

The schemes has now been extended and will now run until 5 April 2035.

The Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) are designed to encourage investment into new or young companies through tax-relief incentives.

Investors get up to 30% (SEIS  50%) upfront income tax relief and an exemption from capital gains tax (CGT) on any profits made on a subsequent sale of shares after a qualifying period and the possibility of income tax relief is they are sold at a loss.

You can get relief at the rate of 30% on your investment in shares up to a total cost of £1m with EIS, more if it is a knowledge based company. With SEIS you get 50% tax relief but on a much smaller value of shares.

There are a lot of conditions and both the company and investor must be qualifying.

There are conditions for:

1. The company – location and business activity
2. The investor
3. When and how the money is used by the company
4. The shares being issued

The relief is used to reduce the tax for the year but there are carry back options.

There is also the possibility of holding over Capital Gains where the proceeds were used to make the investment.

There is another way of looking at the tax advantages of such investments. If you invest say £50,000 in an SEIS qualifying company, you get up to £25000 repaid in income tax relief. So, your investment has only cost you £25,000. If it fails to prosper and you sell at a loss, you may get further income tax relief on the loss.

So, while you have invested in more risky startup venture, you get most of your money back, even if it all goes belly up. If it prospers and you sell at a profit, that profit is tax free.