The Chancellor’s Autumn Statement has announced welcome changes to investments in enterprise, with further tax breaks becoming available. Changes have been announced for Venture Capital Trusts, Enterprise Investment Scheme and a new scheme Seed Enterprise Investment Scheme, which will be aimed at encouraging investment in start up businesses.
Individuals who invest in qualifying businesses will attract 50 percent income tax relief with a yearly limit of £100,000 investment. Companies will have a cumulative limit of £150,000. Capital Gains will attract relief and losses will also be eased with tax provision. According to Alex Macpherson, manager of the ventures unit at Octopus, which is the largest provider of funding for the Enterprise Investment Scheme in the UK, SEIS will encourage investment which is tax efficient. He also considers the scheme to be an attractive proposition for entrepreneurs who have sold their own company and are looking for investment opportunities in other new businesses.
These entrepreneurs will also contribute their considerable knowledge and skills which will benefit the companies.
Sherry Coutu is a successful investor and advises new angels to
“invest with others or as part of a syndicate of angels rather than on their own. This will help them learn the best techniques for success and avoid some obvious mistakes.”
Another expert advises caution, as seed investments are a high risk category of investment opportunities. The Chancellor also announced a change to VCTs, with the £1 million cap being removed, as long as it is a qualifying company. Experts welcome this move, saying it will encourage efficient investments with higher returns.
Want to learn more?
Subscribe to our newsletter to get accounting tips like this right to your inbox
About The Author
An experienced business and finance writer, sometimes moonlighting as a fiction writer and blogger.