Has anybody looked at SEIS investments

chucknorris

If you don't know what they are, follow this link:

http://www.telegraph.co.uk/finance/businessclub/11490540/Nine-things-every-entrepreneur-needs-to-know-about-SEIS.html

As I will be disposing of assets soon and will incur a significant CGT bill, I did think about these, but they just look fat too risky to me. I could see it going horribly wrong, so I don't think that I could invest in a SEIS.

I can't deny that the tax relief is huge, but so is the risk.

redux

I hadn't heard of it, and it wouldn't apply to my modest fortunes anyway, but it does look like something to do with someone you already know, rather than hunt around for schemes to invest in.

It might give me an idea for starting up something with a friend or family member investing though, have to study the rules to see what qualifies.

You might want to study it a bit more yourself, as the government website seems to say that relief is allowed against income tax, but allowing relief against capital gains tax is being or has been phased out.

https://www.gov.uk/guidance/seed-enterprise-investment-scheme-background

Captial Gains Tax: reinvestment relief

This relief was originally only available for the 2012 to 2013 tax year but has been extended to 2013 to 2014 at half the rate. If you sold an asset 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 you sold an asset that would give rise to a chargeable gain in 2013 to 2014, and reinvest 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.

But keep reading beyond there, as there are carry back possibilities, and some years allowed to make a claim.

chucknorris

redux wrote: »

I hadn't heard of it, and it wouldn't apply to my modest fortunes anyway, but it does look like something to do with someone you already know, rather than hunt around for schemes to invest in.

It might give me an idea for starting up something with a friend or family member investing though, have to study the rules to see what qualifies.

You might want to study it a bit more yourself, as the government website seems to say that relief is allowed against income tax, but allowing relief against capital gains tax is being or has been phased out.

https://www.gov.uk/guidance/seed-enterprise-investment-scheme-background

Captial Gains Tax: reinvestment relief

This relief was originally only available for the 2012 to 2013 tax year but has been extended to 2013 to 2014 at half the rate. If you sold an asset 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 you sold an asset that would give rise to a chargeable gain in 2013 to 2014, and reinvest 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.

But keep reading beyond there, as there are carry back possibilities, and some years allowed to make a claim.

That's an old link (2013), it was extended, this was published April this year:

https://www.gov.uk/government/publications/seed-enterprise-investment-scheme-income-tax-and-capital-gains-tax-reliefs-hs393-self-assessment-helpsheet/hs392-seed-enterprise-investment-scheme-income-tax-and-capital-gains-tax-reliefs-2015

kidmugsy

I looked. Too risky for us.

chucknorris

kidmugsy wrote: »

I looked. Too risky for us.

That's what I think too.

Spidernick

I would hardly call 30% relief 'huge' given the risks involved. However, I do think that richer people will invest in these and Venture Capital Trusts a lot more given the continued squeeze on pension relief. They are not for the likes of me though.

tg99

Yep I've looked at it as maxed out on other tax efficient vehicles (plus had significant capital gains that meant I could defer or get relief on) so have previously made some investments in an EIS and SEIS fund spread across a number of companies. Obviously have to ensure you do a lot of prior due diligence, make sure you understand fully what you are investing in and the risks and charges involved. Given the higher risk then my exposure to SEIS is smaller than my VCT and EIS holdings.

tg99

Also worth adding that the minimum subscription amounts tend to be quite high versus other investment vehicles if you are investing via a fund. You also have to be prepared not to be able to access your money for a significant period of time, as even if an exit is targeted in say 5-6 years it could take much longer than that.

chucknorris

tg99 wrote: »

Also worth adding that the minimum subscription amounts tend to be quite high versus other investment vehicles if you are investing via a fund. You also have to be prepared not to be able to access your money for a significant period of time, as even if an exit is targeted in say 5-6 years it could take much longer than that.

I wouldn't miss £100k for that long, but it is the risk that puts me off, rather than the illiquidity. How did the SEIS investment work out for you?

chucknorris

Spidernick wrote: »

I would hardly call 30% relief 'huge' given the risks involved. However, I do think that richer people will invest in these and Venture Capital Trusts a lot more given the continued squeeze on pension relief. They are not for the likes of me though.

Neither would I, but it is 75%, not 30% (if you include CGT relief)! Because I am talking about SEIS's, NOT VCT's as the thread clearly states. Comprising of 50% income tax relief and also 50% of the previous years CGT refunded, so this is an investment to consider after paying a large CGT bill, which I will be quite soon. But I have already said, that I still wouldn't be inclined to invest even with that 'huge' amount of tax relief available. But I thought that it was worth posting to see if anyone could add something that maybe I had overlooked.

In fact if the whole investment goes under, it is more than 75%, because you can also offset losses (might be restricted, I haven't looked that far into it).

bigadaj

I would never say that tax relief overcomes investment risk but with that level of relief, it means that the government is taking more risk than you are at the end of the day.

I had a look at them a couple of years ago when I had a small cgt bill, but didn't have the time or level of comfort to progress with it. I have ventured into vcts this year as I'm getting close to pension limits and like the relative diversification though have put in less than 1% of assets.

I think it's the relative level of risk exposure rather than the absolute sums involved, if you are looking at six or seven figure gains then that level of relief on a small percentage of your gain might look more attractive to me, though this is an area in which diversification is absolute essential as some or even many of these will produce little or no return, including capital.