Members of the Enterprise Investment Scheme Association (EISA) believe that more money will be invested into SMEs this year after George Osborne recently announced a cut towards pension tax relief.
During the summer budget, Chancellor George Osborne announced a fresh cut towards pension tax reliefs for those who earn over £150,000. Sarah Wadham, director of EISA believes that Osborne’s announcement will give the UK’s top earners an opportunity to capitalise on Enterprise Investment Schemes (EIS) and Seed Enterprise Investment Schemes (SEIS). Any investment would ultimately give microbusiness owners access to more funding.
With high earners looking for a greater source of tax relief, the SME investment schemes could become an ‘‘even more attractive option’’.
‘‘EIS’s extensive package of legitimate government sanctioned tax reliefs – 30%/50% income tax relief, no CGT or IHT, loss relief and CGT deferral – arguably make EIS and SEIS one of the most attractive tax-efficient investments available,’’ stated Wadham.
‘‘As such it is no surprise that there is growing interest from wealth managers, IFAs and tax planners, and their clients, in using EIS/SES, particularly over the past few years as tax relief on pensions has been regularly eroded.’’
Both SEIS and EIS have become essential options for small business owners who are looking to receive funding. In April SME Insider reported that small business owners could potentially benefit from £525m in tax relief this year because of the two schemes.
‘‘It should be remembered that the purpose of EIS is to provide start-up and expansion funding for smaller UK businesses, which are the backbone of the economy,’’ continued Wadham.
‘‘EIS/SEIS are relatively high risk investments in smaller, unlisted companies which are not suitable for all everyone and investors should understand the risks before investing.’’