Extension of CGT Reinvestment Relief for SEIS Investors

There was good news for SEIS investors announced in yesterday’s budget – Capital Gains Tax (CGT) reinvestment relief is being extended for a further tax year.  This extension means that CGT due on chargeable gains made in the 2013 – 14 tax year can be reduced, but at a less generous rate as was available for the 2012 – 13 tax year.  This is summarised as follows

  • Chargeable gains up to £100,000 made in the 2012 – 13 tax year are 100% exempt from CGT by reinvesting the gain in SEIS qualifying shares during the 2012 – 13 tax year or 2013 – 14 tax year and treating the investment as if made in the prior year.
  • Chargeable gains up to £100,000 made in the 2013 – 14 tax year will be 50% exempt from CGT by reinvesting the gain in SEIS qualifying shares during the 2013 – 14 tax year or 2014 – 15 tax year.

No changes have been made to the 50% Income Tax relief available on SEIS investment.

This development, whilst positive, spells the end of the “101% tax relief”.  Maximum reliefs are summarised in the table below:

This is summarised below:

. 2012/13 2013/14
. £ £
Investment 100,000 100,000
Income tax relief (50,000) (50,000)
Capital Gains tax reinvestment relief (28,000) (14,000)
Net Cost of investment 22,000 36,000
But if it fails next year….
Income tax relief
(£100,000 invested – £50,000 SEIS) *45% tax rate (22,500) (22,500)
Net cost of investment (500) 13,500
Tax reliefs – % of investment 100.5% 86.5%

Chiene + Tait has considerable experience in assisting companies obtain SEIS qualification status and in assisting ivnestors to obtain the valuable tax reliefs available to them.

Further information on SEIS and other tax reliefs, such as EIS, R&D and Patent Box can be downloaded from the right of this page.

If this change could affect you, or a client, please do not hesitate to contact Neil Norman on 0131 558 5800 or email neil.norman@chiene.co.uk.