Mar 222013

Some good news for investors in this year’s Budget. And do they need it in the current economic climate.

These are:

Seed Enterprise Investment Scheme  

This is a scheme for individuals investing in seed capital.

Reinvestment relief extended – This applies when another asset such as a property, or perhaps another part of the investment portfolio such as the family holding in Glaxo is sold. The gain can be sheltered by reinvesting the proceeds in SEIS shares.

Until now, the relief was available only for gains accruing in the 2012/13 tax year. This has been extended to the 2013/14 tax year, but only half the gain will be exempt this time.

Independence test amended – investments in companies that have been set up by company formation agents will not be disqualified.

This addresses the fact that such companies are initially under the control of the agent during the “setting-up” process.

The idea of independence is that these are supposed to be small, high risk companies  and  are expected to stand on their own feet, without having support from a parent. For example, a small biotech venture with Glaxo as its major shareholder isn’t that small or risky – whenever it gets into trouble, its parent can just pump in more money.

You can find out more about the SEIS Scheme at HMRC’s Manual VCM30000.

Abolition of stamp duty – finally!

Sorry. That was a little fib to get people excited. Some stamp taxes have been abolished, but not the taxes paid on the main markets.

SDRT on unit trusts and OEICs to be abolished in Finance Bill 2014. Which is good news, as it removes one layer of tax payable when buying into a fund – but the fund still has to pay tax on buying the underlying investments.

One question springs to mind – why is there no similar abolition for investment trusts and other such vehicles? Following the JP Morgan Claverhouse case, OEICs/unit trusts and investment trusts require equal VAT treatment on the grounds that they both offer a similar product to investors. Should this not be equally the case with stamp duty?

SDRT on share transactions for Small Company Growth Markets to be abolished in  Finance Bill 2014 – starting from April 2014 – an encouragement to invest in high risk areas – not for the faint hearted.

There is a commentary on the AIC page on the abolition of duty on AIM shares here.

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Satwaki Chanda

Satwaki Chanda

Satwaki Chanda is a tax lawyer with a First Class degree in Mathematics. Called to the Bar in 1992, he is the Editor of Tax Notes.
Satwaki Chanda

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