JMG technologies has already raised £100,000 under SEIS (£150,000 being the maximum), so Samantha invests 50,000 in SEIS shares and 50,000 in EIS. Samantha invests £100,000 into JMG Technologies which have qualified for both EIS and SEIS. Samantha decides to invest in a company that qualifies for both SEIS and EIS as she wants to avail of the tax relief opportunities. Samantha would like to invest in an early stage company. An investor can offset their relief against either income tax or CGT. Loss relief will not eradicate the entire damage, but it will soften the blow depending on the investor’s tax bracket.Īn investor can claim loss relief on the year of the loss, then offset the loss against their current tax bill or the one for the previous year. To calculate loss relief, deduct what the investor collected in tax relief from the amount they invested. If an investor buys shares in an SEIS/EIS company and the shares are sold at a loss, loss relief enables the investor to offset the loss against their income tax or CGT liability. Gains resulting from shares that are sold are 100% exempt from CGT! The schemes can also provide 100% inheritance tax relief for investors (see our previous blog “Why SEIS/EIS inheritance relief should matter to you now” regarding more info about this specific incentive).Ī lesser know incentive of SEIS/EIS is loss relief. An EIS investor can also get 100% CGT deferral relief when investing in an EIS company. Income tax relief is just one of the incentives that EIS provides. For SEIS, an investor will receive 50% income tax relief. For example, an investor will receive 30% income tax relief if they invest £100,000 in an EIS company and have a tax liability of £30,000, their income tax liability could reduce to zero. The incentive of SEIS/EIS for investors is the tax relief opportunities. With EIS, a company can raise up to £12 million and with SEIS the company can raise £150,000. SEIS/EIS were set up by the government to enable small startup companies to attract their first (and riskiest) round of capital. This incentive enables an investor to offset losses obtained against either their Income Tax or Capital Gains Tax “CGT” amount. Fortunately, an investment in Enterprise Investment Scheme “EIS” and Seed Enterprise Investment Scheme “SEIS” companies offer loss relief. ![]() ![]() Everyone works hard for their money, and as a result investing is a daunting experience due to the risk of loss.
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