For investors, 5 April 2014 is the final date in which it is possible to obtain 100% Capital Gains Tax (“CGT”) Reinvestment Relief on an SEIS qualifying investment. This is detailed as follows:
- Chargeable gains up to £100,000 made during the 2012-13 tax year are 100% exempt from CGT by reinvesting the gain in SEIS qualifying shares during the 2013-14 tax year and treating the investment as if made in the prior year (this is known as “carry back”).
- Chargeable gains up to £100,000 made during 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 .
Unlike the CGT Reinvestment Relief, no changes are scheduled to the 50% Income Tax relief available on SEIS investments. Therefore, this is available on SEIS investments whether or not the investor chooses to carry back. The CGT Reinvestment Relief follows the Income Tax relief, so if the investor chooses to carry back their Income Tax relief, they automatically carry back their CGT Reinvestment Relief.
Much has been said in the financial press and by this commentator, of the availability of ‘101% tax relief’ on SEIS investments. Investments made after 5 April 2014 will no longer be able to claim this level of relief.
Maximum reliefs are summarised in the table below:
|2012/ 13 (£)||2013/ 14 (£)|
Income Tax relief
(2013/ 14 Investment “carried back”)
|Capital Gains Tax Reinvestment Relief||(28,000)||(14,000)|
|Net cost of investment||22,000||36,000|
Capital Gains Tax on disposal after 3 years
|But, if the company 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 as a % of investment||100.50%||86.50%|
Chiene + Tait has considerable experience in assisting companies obtain SEIS qualification status and in assisting investors to obtain the valuable tax reliefs available to them.