SEIS will not cease and EIS may have a few tweaks
The headlines this year will focus on the numerous changes affecting individuals, and savers and pensioners in particular, who received a thank you from the Chancellor for involuntarily having
The headlines this year will focus on the numerous changes affecting individuals, and savers and pensioners in particular, who received a thank you from the Chancellor for involuntarily having accepted low interest rates in support of the wider economy.
It was commended to the House as a Budget for "the makers, the doers and the savers", although perhaps the savers did best.
Those who invest in the makers and doers will be pleased to see that the Seed Enterprise Investment Scheme (SEIS) and the associated capital gains tax reinvestment relief will be made permanent (it was originally only a temporary measure).
For EIS and SEIS, the Government announced that it will consult on the need to accommodate the use of convertible loans. This is very encouraging. At present, shares issued on the conversion of convertible loans do not without additional structuring qualify for EIS or SEIS status. This means that timing issues can unduly affect relief, whereas, conceptually, the investor is on conversion of a convertible loan taking risk in the company in a way commercially comparable to straightforward EIS-eligible investors. EIS and SEIS reliefs contain numerous traps for the unwary, which can add unnecessary cost and complexity to fundraisings. Anything to reduce these whilst preserving the public policy aim of the reliefs is to be welcomed.
In addition, the Government is concerned about the use of what it calls contrived structures to allow EIS investment in low-risk activities benefitting from income protection through Government subsidies. We can expect venture capital tax relief for these structures to be stopped. EIS and SEIS are aimed at giving investors a tax break to encourage investment in riskier enterprises and so it is no surprise that the Government is targeting structures where the risk does not warrant the relief.
It was commended to the House as a Budget for "the makers, the doers and the savers", although perhaps the savers did best.
Those who invest in the makers and doers will be pleased to see that the Seed Enterprise Investment Scheme (SEIS) and the associated capital gains tax reinvestment relief will be made permanent (it was originally only a temporary measure).
For EIS and SEIS, the Government announced that it will consult on the need to accommodate the use of convertible loans. This is very encouraging. At present, shares issued on the conversion of convertible loans do not without additional structuring qualify for EIS or SEIS status. This means that timing issues can unduly affect relief, whereas, conceptually, the investor is on conversion of a convertible loan taking risk in the company in a way commercially comparable to straightforward EIS-eligible investors. EIS and SEIS reliefs contain numerous traps for the unwary, which can add unnecessary cost and complexity to fundraisings. Anything to reduce these whilst preserving the public policy aim of the reliefs is to be welcomed.
In addition, the Government is concerned about the use of what it calls contrived structures to allow EIS investment in low-risk activities benefitting from income protection through Government subsidies. We can expect venture capital tax relief for these structures to be stopped. EIS and SEIS are aimed at giving investors a tax break to encourage investment in riskier enterprises and so it is no surprise that the Government is targeting structures where the risk does not warrant the relief.