Shaftesbury Avenue Ltd ( the “Company”) will apply to HMRC for advance clearance under the Seed Enterprise Investment Scheme. The availability of any tax relief, including EIS and SEIS, depends on the individual circumstances of each investor and of the Company, and may be subject to change in the future. If you are in any doubt about the availability of any tax reliefs, or the tax treatment of your investment, you should obtain independent tax advice before proceeding with your investment. Please visit the HMRC website for further information on EIS tax relief.
Risk Warning: Your capital is at risk. Investing in early stage companies involves risks including loss of capital, illiquidity, lack of dividends and dilution. Nothing on this page constitutes investment, tax or legal advice. Before investing in the Company you should consult your financial adviser.
If you are interested in investing in Shaftesbury Avenue Limited, then please contact a member of our team who will be able to take you through the application process and discuss theatre production in more detail.
1. Income Tax Relief
SEIS tax relief allows an investor to reduce the amount of his, or her, liability to income tax. Relief is obtained at the 50% rate of income tax, on the amount invested in the shares of SEIS qualifying companies. Relief is available on a maximum investment of £100,000 under SEIS from 6th April 2012. The amount of income tax relief cannot exceed an individual’s income tax liability. The individual must hold the shares for three years. Investors should be able to deduct an amount equal to 50% of their investment from their liability to income tax in the current year (for example, see Table 1).
Gross investment in shares £ 10,000
Less tax relief of 50% (£ 5,000)
Net cost of investment £ 5,000
There is a 'carry back' facility which allows all or part of the cost of shares acquired in one tax year, to be treated as though those shares had been acquired in the preceding tax year.
2 Capital Gains Tax Reinvestment relief
SEIS relief allows investors to gain exemption to 50% of capital gains tax liabilities in the current (2013/14) tax year , in conjunction with the income tax relief described above, or 100% exemption if the carry back facility is deployed, as long as the SEIS income tax relief is also carried back to the 2012/13 tax year. An investor can defer the liability to capital gains tax on any chargeable gain arising from the disposal of any asset after 28th November 1994, by investing an amount equivalent to that gain in the shares of an SEIS qualifying company. (For example, see Table 2.) Deferral only applies if the investment in the Company is made no more than one year before or three years after the disposal of the asset to which the gain refers.
Gross investment in shares £ 10,000
Less CGT exemption at 50% of 28% (£ 1,400)
Less income tax relief at 50% (£ 5,000)
Net cost of investment £ 3,600
This example assumes the investor is a taxpayer with a capital gain of £10,000 (i.e. a CGT liability of £2,800).
3 Capital Gains Tax Exemption
SEIS tax relief exempts investors from the liability to capital gains tax when they dispose of their shares. Provided that the disposal takes place at least three years after the issue of the shares and also provided that SEIS tax relief has not previously been withdrawn, any gain accruing to the investor on the sale, or disposal of shares is not liable to capital gains tax. (For example, see Table 3.) This exemption does not apply to any gain deferred under the Deferral rules.
Realised value of shares after 3 years £20,000
Original gross investment in shares (£10,000)
Tax free gain £10,000
4 Loss Relief
Loss relief is available for taxpayers able to claim all tax relief at the higher rate of tax (currently 45%) or the lower rate (currently 20%) even if the investment results in a total loss. The effect of the tax relief could reduce the net cost to 27.5% of the initial investment.
45% taxpayer 20% taxpayer
Realised value of shares Nil Nil
Original gross cost of investment (£10,000) (£10,000)
SEIS income tax relief at 50% 5,000 5,000
Loss (5,000) (5,000)
Loss relief 2,250 1,000
Net Loss (2,750) (4,000)
Loss relief on unquoted shares allows investors to offset any loss on their investment against either capital gains or taxable income in the year of loss. Assuming that tax rates remain unchanged, both higher rate tax payers (45%) and basic rate tax payers (20%) should be able to offset any losses arising (after SEIS income tax relief) against either capital gains or taxable income of the previous year, provided that SEIS tax relief has not been previously withdrawn. (For Example, see Table 4.) If not utilised in this way, losses can be set against capital gains in subsequent years.
5 Inheritance Tax Relief
Unquoted shares in qualifying companies held for at least two years should qualify for business property relief at 100% regardless of the size of holding or voting entitlement.
Disclaimer Information and statements above and elsewhere in this document are based on the Directors understanding of current tax law and HM Revenue & Customs practice. This is only a condensed summary and should not be construed as constituting advice. If you are in any doubt as to your tax position, you should contact your professional adviser without delay.