Venture capital schemes remain a vital source of funding for growing businesses – from start-ups to those quoted on the Alternative Investment Market (AIM). However, the complexity of the schemes and their related pitfalls continue to increase.
We are a leading adviser on venture capital reliefs. We are one of only two practising accountancy firms on the AIM Advisory Group of the London Stock Exchange (LSE) and have co-authored A Guide to AIM Tax Benefits, published jointly with the LSE.
As recognised specialists in this complex area of legislation, we can often establish whether HMRC will grant advance assurance, which is usually needed to attract investors. We aim to give you clarity around your likelihood of getting advance assurance, before we start detailed work.
Opportunities with venture capital reliefs
The advantages of the Venture Capital Trust (VCT) and Enterprise Investment Scheme (EIS) are clear. They entitle individuals to 30% income tax relief on amounts subscribed for new shares in EIS-qualifying companies or VCTs. In addition, when held for a qualifying period (three years under EIS; five years for VCT), gains on disposal are also exempt from capital gains tax.
EIS and VCT funds are an important source of funding to smaller companies, thanks to low interest rates and increasing restrictions on other tax-efficient investment opportunities for individuals. They are also now available for larger companies that may use the capital to expand overseas or into the UK.
The Seed Enterprise Investment Scheme (SEIS) offers an even more tax-beneficial scheme with income tax relief at 50% for investors in small, newly established businesses (with trade no more than two years old). If your company has no more than £200k of gross assets and fewer than 25 full-time equivalent employees, it may be able to benefit.
Guiding you through the process
Generous HMRC-approved tax savings are not always easy to secure. The EIS, SEIS and VCT rules contain various conditions and anti-avoidance provisions.
We can help you mitigate the risks of the anti-avoidance provisions and get HMRC advance assurance that your company meets the conditions for EIS or SEIS status. We can also support with your compliance obligations to give the certification your investors need to claim tax relief.
Please do not hesitate to contact us to discuss our services and how your business could benefit.