SEIS - CGT re-investment relief
There were not many changes announced in the Budget in the venture capital space. This is perhaps not surprising given that the Chancellor, broadly, is sticking to Plan A.However, it was announced
There were not many changes announced in the Budget in the venture capital space. This is perhaps not surprising given that the Chancellor, broadly, is sticking to Plan A.
However, it was announced that the capital gains tax relief for re-investing gains into SEIS companies will be extended. It was due to expire this tax year, but now will be extended to the next tax year (2013/2014).
What this means is that capital gains arising in tax year 2013/2014 can be re-invested in SEIS companies and those gains are then relieved from capital gains tax (but see below). The re-investment will have to be made in 2013/2014 or 2014/2015 for the extended relief to apply.
There will be a cap on the amount eligible for re-investment, to correspond with the SEIS contribution limit for income tax relief.
So far so good, but there is a sting in the tail. The capital gains tax relief is restricted to 50% of the amount of the gain reinvested.
On balance this is good news - without it there would be no re-investment relief for SEIS investment going forward - but it could have been better - a 50% restriction may limit the amount that investors are able to subscribe.
(Finally, a very small technical change was made to the definition of SEIS eligible companies to address an issue with corporate formation agents)
However, it was announced that the capital gains tax relief for re-investing gains into SEIS companies will be extended. It was due to expire this tax year, but now will be extended to the next tax year (2013/2014).
What this means is that capital gains arising in tax year 2013/2014 can be re-invested in SEIS companies and those gains are then relieved from capital gains tax (but see below). The re-investment will have to be made in 2013/2014 or 2014/2015 for the extended relief to apply.
There will be a cap on the amount eligible for re-investment, to correspond with the SEIS contribution limit for income tax relief.
So far so good, but there is a sting in the tail. The capital gains tax relief is restricted to 50% of the amount of the gain reinvested.
On balance this is good news - without it there would be no re-investment relief for SEIS investment going forward - but it could have been better - a 50% restriction may limit the amount that investors are able to subscribe.
(Finally, a very small technical change was made to the definition of SEIS eligible companies to address an issue with corporate formation agents)