Jonathan Riley: overly complex SEIS

While intricate tax schemes like SEIS are not boosting investment, the Growth Accelerator may do the trickWhen the Seed Enterprise Investment Scheme (SEIS) was first introduced, the Chancellor announced an exemption from capital gains tax on gains realised in 2012/13 and reinvested in qualifying SEIS companies in 2012/13 or, given the correct circumstances, 2013/14. This relief has now been extended to apply to gains arising in 2013/14 that are reinvested during 2013/14 or 2014/15. While the extension is to be welcomed, it is much less generous than the relief applying to gains arising in 2012/13 as only half of the gains reinvested will be exempt.

While intricate tax schemes like SEIS are not boosting investment, the Growth Accelerator may do the trick

When the Seed Enterprise Investment Scheme (SEIS) was first introduced, the Chancellor announced an exemption from capital gains tax on gains realised in 2012/13 and reinvested in qualifying SEIS companies in 2012/13 or, given the correct circumstances, 2013/14. This relief has now been extended to apply to gains arising in 2013/14 that are reinvested during 2013/14 or 2014/15. While the extension is to be welcomed, it is much less generous than the relief applying to gains arising in 2012/13 as only half of the gains reinvested will be exempt.

This extension suggests that the government is struggling to encourage sufficient take-up of SEIS investment; despite the generous tax-breaks on offer under the scheme, people are understandably reluctant to invest in such high-risk companies with a limited track record. Furthermore, for relatively small investments (the limit on funds that a company can raise under the SEIS is £150,000), the rules are overly complicated with the additional due diligence and administration burdens also providing barriers to SEIS uptake.

A real growth stimulus

While it remains to be seen whether the extension will improve SEIS take-up rates and support the government's growth agenda for the UK, there are other incentives that smaller businesses should consider to help them achieve their ambition and potential. For example, GrowthAccelerator.

The service helps the fastest growing SMEs achieve their aspirations through the use of business coaches and leadership and management support. Backed by the government, the support can be two-fold, it provides an opportunity for businesses to reduce their risk to investors by creating a clear strategy aligned with support for the leadership team, while assisting companies to attract investors and access finance to support their ambitions.

Although there are no tax reliefs available, GrowthAccelerator helps businesses achieve something that is more valuable: sustainable growth. With over 5,000 businesses already seeing the benefits, if the Government is serious about growth perhaps its strategy should focus on the further development of such support to encourage investment, instead of making small changes to an already over-complicated tax system?

For more information about GrowthAccelerator go to www.growthaccelerator.co.uk or follow @growthaccel.

Jonathan Riley is senior tax partner at Grant Thornton UK LLP

Jonathan Riley |Head of tax, Grant Thornton UK LLP

Jonathan Riley FCA is head of tax at Grant Thornton UK LLP, based in the Leeds office where he is also senior partner. He was previo...

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