Ho, Ho, Ho EISmas cheer…..

The draft clauses for the 2012 Finance Act brought good news for anyone looking to raise share capital under the Enterprise Investment Scheme (EIS).

We at Nyman Libson Paul are heavily involved with EIS and have seen the scheme’s popularity grow in recent years, particularly since the increase in Income Tax relief to 30% in 2011. Whilst we are still waiting for EU State Aid approval for the annual raise limit to go up to £10 million, some other good news has come along in the meantime.

Film Industry fears over new qualifying rules were eased, when previous proposals were dropped in favour of anti-avoidance measures aimed at circular schemes and pre-funded businesses. Meanwhile, easing of rules for connected persons means that investors may also make loans to EIS companies without it impacting on the number of shares they may hold. This offers more funding options and should prove attractive to investors and companies alike.

We now have the details of SEIS (Seed EIS). Offering 50% tax relief and a 2012-13 CGT holiday on investment, it applies so that a company can raise up to £150,000 in total if it has up to 25 employees and assets up to £200,000 at the time of issue. It must be a new trade and directors may invest. At least £75% of the SEIS money must be used before any EIS money can be raised. If SEIS is used in the same year as EIS it will also restrict the amount raised under EIS.

It just gets better…