Regulation  

HMRC extends CGT relief for Seed EIS

Seed Enterprise Investment Scheme guidance has been updated to include details of the extension to 2013 to 2014 for capital gains tax reinvestment relief at half the rate.

Seed Enterprise Investment Scheme (SEIS) rules have also been revised to include details of the amendment to the independence condition for companies in respect of any on-the-shelf-period.

Capital gains re-investment relief was originally only available for SEIS for the tax year 2012 to 2013 but has been extended to 2013 to 2014 at half the rate.

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If an investor disposed of an asset that would have given rise to a chargeable gain in 2012 to 2013 and reinvested all or part of the amount of the gain in shares which also qualify for SEIS income tax relief, the amount reinvested may be exempted from capital gains tax.

If an investor disposes of an asset that would give rise to a chargeable gain in 2013 to 2014 and reinvests all or part of the amount of the gain in shares which also qualify for SEIS income tax relief, half of the amount reinvested may be exempted from capital gains tax.

Capital gains re-investment relief is also subject to the £100,000 annual investment limit, which applies for income tax relief. Thus for 2012 to 2013 gains of up to £100,000 may be exempted and for 2013 to 2014 up to £50,000.

The latest date for making a claim for 2012 to 2013 is 31 January 2019 and, for 2013 to 2014, 31 January 2020.

The asset does not have to be disposed of first; the investment in SEIS shares can take place before the disposal of the asset, providing that both the disposal and investment take place in the same year.

If an investor makes use of the ‘carry-back’ facility for the purposes of SEIS income tax relief any claim to reinvestment relief must match the year in which the shares were then treated as issued.

If an investor is issued SEIS shares in 2013 to 2014, they may want to claim SEIS income tax relief as if all or some had been issued instead in 2012 to 2013.

If they do so, the shares treated as issued in 2012 to 2013 are also treated as issued in 2012 to 2013 for the purposes of re-investment relief and the investor cannot claim re-investment relief on gains made in 2013 to 2014 in respect of those shares.

The conditions for qualifying companies are the same as those which apply for EIS.

http://www.hmrc.gov.uk/seedeis/background.htm#2