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Tax reliefs for seed investment: consultation

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The government has invited comments on a new Business Angel Seed Investment Scheme (BASIS) and the proposed reform and simplification of the Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCTs), with a view to introducing legislation in Finance Bill 2012.

Evidence suggests that SMEs and start-ups encounter difficulties in accessing equity finance up to £10 million, HM Treasury said. ‘Those difficulties may be particularly acute for seed stage companies.’

The BASIS scheme will be based on the EIS but targeted more directly at ‘business angels’ to incentivise investment at the seed stage of a company’s development, according to the consultation document Tax-advantaged venture capital schemes: a consultation published today.

Budget 2011 announced an increase in the rate of EIS income tax relief to 30 per cent from April 2011.

‘From April 2012 the government will increase the annual EIS investment limit for individuals to £1 million, increase the qualifying company limits to 250 employees and gross assets of £15 million for both EIS and VCT, and increase the annual investment limit for qualifying companies to £10 million for EIS and VCT. All these changes are subject to State aid approval,’ the Treasury added.

Comments are invited by 28 September.