CIC Association

Serving Community Enterprise

George Osborne announced the launching of SEIF, an investment scheme with 50% cashback on investment up to £100,000.

See:

http://www.thisismoney.co.uk/money/investing/article-2067645/Invest...

Questions:

1.  Will this scheme apply to CIC's?

2.  Will it apply to CIC's in Scotland?

3. When will it start?

Views: 623

Replies to This Discussion

1. It should be applicable to CIC's Limited by Shares but not those Ltd by Guarantee

2. It will apply equally in Scotland as anywhere else in UK

3. Investments made on or after 6 April 2012

 

http://www.hmrc.gov.uk/tiin/tiin600.pdf 

 

This is a key relief and should be of extreme interest to all Share CICs.

Alastair

Thanks for the response.  Since posting my questions I've learnt some more, namely that there is a restriction in that incorportation has to be under 2 years from the date of application.  Also it is limited to a 30% or less share holding.

The new scheme – the Seed Enterprise Investment Scheme (SEIS) – will be focused on smaller, early stage companies carrying on, or preparing to carry on, a new business in a qualifying trade. The scheme will make available tax relief to investors who subscribe for shares and have a stake of less than 30 per cent in the company.

 

This measure introduces a new tax-advantaged venture capital scheme, similar to the

Enterprise Investment Scheme (EIS).

 

The relief will apply to investments made on or after 6 April 2012.

 

For the first year of the new scheme, the Government will offer a capital gains tax (CGT) holiday – gains realised on the disposal of assets in 2012-13 that are invested through SEIS in the same year will be exempt from CGT.

 

Proposed changes

 

Legislation will be included in Finance Bill 2012 to provide for a new tax advantaged venture capital scheme.

 

This will:

 

  • apply to smaller companies, those with 25 or fewer employees and assets of up to £200,000, which are carrying on or preparing to carry on a new business;
  • give income tax relief worth 50 per cent of the amount invested to individual investors with a stake of less than 30 per cent in such companies, including directors who invest in their companies;
  • apply to subscriptions for shares, using the same definition of eligible shares as EIS (which it is proposed will be widened in Finance Bill 2012);
  • apply to an annual amount of investment of £100,000 per investor, with unused annual amounts able to be carried back to the previous year, as under EIS;
  • provide for relief within an overall tax favoured investment limit of £150,000 for the company. To give the greatest degree of flexibility, this will be a cumulative limit, not an annual limit;
  • provide for an exemption from CGT on gains on shares within the scope of the SEIS; and,
  • provide for an exemption from CGT on gains realised from disposals of assets in 2012-13, where the gains are reinvested through the new SEIS in the same year.

 

The list of excluded activities comprises:

 

  1. Dealing in land, in commodities or futures or in shares, securities or other financial instruments;
  2. Dealing in goods otherwise than in the course of an ordinary trade of wholesale or retail distribution;
  3. Banking, insurance, money-lending, debt-factoring, hire-purchase financing or other financial activities;
  4. Leasing, including letting ships on charter or other assets on hire;
  5. Receiving royalties or licence fees;
  6. Providing legal or accountancy services;
  7. Property development;
  8. Farming or market gardening;
  9. Forestry activities and timber production;
  10. Shipbuilding, coal and steel production (in respect of shares issued on or after 6 April 2008;
  11. Operating or managing hotels or comparable establishments, or property used as such
  12. Operating or managing nursing or residential care homes, or property used as such;
  13. Providing services or facilities for any trade carried on by another person (other than a company of which the service provider is a qualifying subsidiary) which consists to any substantial extent of the above activities, and in which a ‘controlling interest’ is held by someone who also has a controlling interest in the trade carried on by the service provider (ITA 2007, s. 199(1)).

This list will be the same as the excluded activities for EIS relief. From 2012, it is proposed to expand this list to include “subsidised generation or export of electricity”

 

One of the other conditions for obtaining this relief, is that the share issue takes place within 2 years of incorporation. It is estimated by HMRC, that only 300ish companies are likely to benefit from the new scheme.

 

They also thought there would be approx 400 CICs after 5 years! For those older than two years it shouldnt be too much to incorporate a new subsidiary to qualify, like Alastair I think this will be of extreme interest.

Thought the BBC Scotland clip was excellent by the way, although I was gutted to hear him call you a charity!

John

Could the CIC Assoc. lobby for inclusion of all CIC's irrespective of length of incorporation in this legistlation?

Perhaps the Assoc. is already on the case, but, could a clarion call go out to members to rally MP's to get this in and discussed now.

Just a thought.

We too were surprised by the charity label given to us.  Shows the ignorance around and in the media.

Last week we made it into The Sun women's section on what to buy for christmas!

Trev

Nice ambition Trev but the reality is it would be a fools errand. It goes against the Govts main theme of simplification and we would have to have some powerful evidence to make a case for a special concession (which in this case I dont think we can).  

We'll wait to see the final detail but the changes in this Bill look hugely positive, I'd go as far as to say they basically allow CIC investment to fly.  Rest assured we're on the case to find ways to include all CICs this will be of interest to.

----

Obviously there are awareness problems..but the BBC??? and after coming down and spending all that time finding out about you? I feel a letter coming...Dear Points of View, why o why o why...

fantastic news on getting into The Sun womens section, you've hit the big time! 

On a serious point, I hope you guys will be sending me something for the Bond, I think we can achieve something there.

Here's an extract from article from FT Adviser

'It also said any activity comprising receipt of feed in tariffs or similar subsidies would not generally be a qualifying activity, except for electricity generated by anaerobic digestion or hydro power, and projects operated by community interest companies, co-operative societies, community benefit societies or Northern Ireland industrial and provident societies.' Full story click here: http://www.ftadviser.com/2011/12/07/investments/tax-efficient-inves...

We dont have confirmation of any sort but this would seem to back up the 'chatter' that the exemptions available currently to Industrial Provident Societies under the (FPO) financial promotions order will be extended to include other legal forms (hopefully to include CICs).  

It was a recommendation put into Govt consultation by the Association last year http://cicassoc.ning.com/profiles/blogs/cic-association-cic-response-t , but much more importantly it was taken forward by the Red tape taskforce as one of its 6 key recommendations.

Cautiously optimistic here, this could make a massive difference.

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