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A new survey from YouGov has revealed that just 13 per cent of investors in small business have an awareness of government tax relief schemes, and just 11 per cent of the respondents would consider investing in a UK start-up.

The report revealed that very few investors have an understanding of the Enterprise Investment Scheme (EIS) and the Seed Enterprise Investment Scheme (SEIS). Although there has been widespread promotion and more small businesses than ever are benefiting, investors are generally unaware of them.

The survey, which questioned 2,341 people, indicated the platforms used by investors during the last two years. The majority of investors – 28 per cent – relied on stockbrokers and banks, while 14 per cent relied on independent financial advisers and crowdfunding platforms were used by three per cent. Crowdcube commissioned the research to discover more about the attitudes of people towards investment, while also finding out how many would be willing to invest in a start-up and the amount of funding.

More than a third of those who would consider backing a brand new company would be prepared to invest less than £499. Only 13 per cent would be happy to invest between £500 and £999, while the proportion of those who would invest between £1,000 and £1,999 was slightly, higher at 16 per cent. Just two per cent of investors would invest more than £25,000.

The co-founder of Crowdcube, Luke Lang, said:

“While many investors are benefiting from tax relief schemes it seems that not all investors are aware of them.”

He called for more action to make investors aware of the tax relief available on investments, so that UK small businesses would benefit.

What is EIS?

Enterprise Investment Scheme provides tax relief of 30 per cent to those wealthy individuals who invest up to £1,000,000 in UK small businesses. The maximum tax relief that may be claimed in a single year is £300,000, although the individual’s income tax liability has to cover the amount of relief claimed. It’s worth understanding that, generally, the shares have to be held for three years and, if they are then sold and have a net gain, the profit is exempt from capital gains tax.

What is SEIS?

Seed Enterprise Investment Scheme is designed to provide relief for people investing in small UK start-ups. A higher rate of tax relief is provided at 50 per cent, to compensate for the somewhat riskier nature of the venture. The maximum investment per year is £100,000. Shares, again, must be held for three years.

Were you already aware of the schemes and the ways in which start-ups are benefiting from them? Comment here and let us know! If you have any questions at all, don’t hesitate to contact the experts here at The Accountancy Partnership.

About The Author

Karl Bilby

We work very closely with our expert accountants to bring you the latest factually correct tax and accounting news. We also enjoy writing about small business news that we hope you find useful!

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