According to Deloitte accountants, the continuing uncertainty of the economy will have a negative effect on traditional funding sources. Private investment has been suggested as an alternative for new small businesses and entrepreneurs. The Seed Enterprise Investment Scheme has been highlighted, following its announcement by the chancellor recently. SEIS will be introduced in April 2012, with a range of incentives to attract investors.
The scheme will be available in addition to the existing Enterprise Investment Scheme. Individuals will be able to invest up to £100,000 into the scheme, attracting 50 percent tax relief to entice business angels and private investors. Capital Gains tax relief will also provide incentive and could offer as much as 78 percent tax relief. The scheme was launched by the government to try and boost investment in business and provide external sources of funding. A tax partner from Deloitte, Stephen Hall said:
“Since the credit crunch we’ve seen more business angels coming forward and providing finance to companies who haven’t been able to get funding through traditional routes.”
He pointed out that a large number of successful entrepreneurs have taken risks to get where they are now and will happily take risks again when the right opportunity presents itself. Hall believes that raising the limit for investment into EIS to £10 million and the introduction of SEIS will make it easier for entrepreneurs to secure funding. The government have improved regulation for Venture Capital Trusts and EIS to make it easier for investors and businesses.
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