There are a new set of tax reliefs available for investors into new start up businesses. The snappily named “Seed EIS” relief will give an immediate tax deduction of 50% of an investment into a brand new business. this is irrespective of what rate of tax that an individual would pay. So if someone invested £10,000 into a qualifying company in 2012/13, they would get a £5,000 deduction from their 2012/13 tax bill, no matter whether they pay tax at 20%, 40% or 50%. If they had PAYE income then this could generate a refund, but if the liability would otherwise be less than £5,000 then the balance would be lost. There is also a fantastic CGT EXEMPTION (not deferment) for 2012/13 and so that could well add up to tax relief of 78%. So if the situation was appropriate, then the initial £10,000 investment would only actually cost £2,200. In the right case, any growth in value of the company would be CGT free as well.
If you are either a new business start up looking for inward investment, or an investor into a new trading company, then Seed EIS needs some serious attention to see if you qualify because the tax relief is truly amazing. The feeling is that it may be TOO amazing and so may not be available for ever, so buy now while stocks last!