Funding tax breaks set to boost young businesses

Young companies could kick-start their growth thanks to new tax incentives for investors, a financial expert believes.

David Dickson (pictured right), senior partner with leading York-based accountants Garbutt & Elliott, believes that the Seed Enterprise Investment Scheme (SEIS) will provide help for young businesses struggling to raise much-needed finance.

“There is a general consensus across the political spectrum that the pursuit of growth and the creation of sustainable employment are currently the most important economic objectives. SEIS fits the bill perfectly,” Mr Dickson said.

SEIS was introduced by Chancellor George Osborne in his autumn statement, and could make a big difference for new companies looking to grow.

“Since the demise of Business Link, many small businesses have struggled to get the right advice to enable them to expand. Here at Garbutt & Elliott, we can help.

“We have a number of clients who want to invest in and support young businesses where the investor’s financial risks are reduced because of the tax breaks available up to April 5, 2014. Now it is up to these businesses to come forward.”

SEIS is a “classically simple” scheme, Mr Dickson said. Investors can input £100,000 in a single tax year which can be spread over a number of companies. Any one company can raise no more than £150,000 in total via an SEIS investment.

“Investors cannot control the company nor have more than a 30 per cent stake in the company in which they invest, so the companies themselves retain their independence. Investors can receive up to 78 per cent tax relief in the tax year the investment is made, ” he explained.

The company must have fewer than 25 employees. The company’s trade must be no more than two years old and have assets of less than £200,000.

Mr Dickson said: “Clearly there are some helpful tax breaks to be had here and there are a significant number of businesses who would benefit substantially for some investment in this challenging economic climate.

“These early-stage businesses are high risk and the SEIS tax breaks significantly reduce the financial risk, better than any other piece of legislation I have seen to support this very important part of the UK economy, particularly the knowledge-based creative sector.”