Mercia EIS Funds

Why SEIS is particularly attractive for 2013/14

25th March, 2013

What Mercia Fund Management says: “The budget was set in the context for every one job lost in the public sector, 6 are created in the private sector and that a majority of this job growth is within SMEs. The budget was set as a budget for the ‘Aspiration Nation’.

We have campaigned hard for improvement to Seed EIS (SEIS) and the budget has in a small way moved us towards help for growing businesses seeking capital for expansion. Seed EIS originally provided (in addition to a 50% income tax relief no matter what your income tax bracket) the ability for an investor to benefit from Capital Gains Tax exemption if the tax liability was invested via SEIS.

However this CGT exemption was applicable only to capital gains made in 2012/13 and invested in 2012/13 or 2013/14. Today the chancellor improved this by extending the exemption to gains made in 2013/14 that can now be invested in 2013/14 and 2014/15. However, we still want to see the government lift investment limits for SEIS to SMEs from the current £150,000 in total to £500,000, and allow investors to invest £200,000 (versus the existing £100,000) per annum via SEIS. This will direct needed and effective capital to a sector devoid of support from many investors and a majority of the banking community.

Furthermore, we implore the government to remove the current status applied to SEIS of ‘de minimums’ as it is an unnecessary bureaucratic limitation applied to young businesses. This continued support of SEIS by the government is therefore welcome but is indeed a relatively small step towards creating a more vibrant start up culture within the UK. Further improvements to SEIS are required to provide further employment growth and wealth creation – both sorely needed at the moment.”

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