Home Brexit Will Brexit affect tax schemes and tax relief?

Will Brexit affect tax schemes and tax relief?

by LLB Reporter
25th Sep 19 11:25 am

It is no secret that Brexit is going to have a huge impact on the whole of the UK, especially when it comes to businesses that have some type of trading across the EU. One area that you might not instantly think about being impacted by Brexit are tax schemes and tax relief.

However, just like many things in the world of business, it looks like our imminent departure from the EU is going to have an impact on this too.

What is SEIS?

The first thing to look at is what SEIS actually is. SEIS is a UK based scheme backed by the government. It is there to help those businesses that may be seen as being high risk to raise funds and finance. The way that it does this is by encouraging key investors to invest in these businesses with their own money.

Of course, these business investors are going to know that there could be some risks to investing in another company. So, in order to make it a more tempting consideration, the government offers those investors the chance to claim SEIS relief.

This means that the investor can claim back tax relief on the money that they are investing. EIS relief can be claimed on up to £1m of investments, although this can rise to £2m in some circumstances.

Needless to say EIS has been a hit and since its creation investors have put in more than £10bn, which in turn has made its way to those smaller companies, those companies in financial difficulties or those who need a boost to get their businesses started in the first place.

What does Brexit mean for SEIS?

So, what does Brexit mean for this important form of business finance? The truth is, much like many things about Brexit, we simply don’t know what is going to happen until it actually happens. The amount of uncertainty around the idea of leaving the EU, well that is one of the most frustrating things about the entire situation.

There is a good chance that Brexit will have an impact on SEIS, but we simply don’t know whether this impact will be dramatic and far-reaching.

What we do know is that there is always going to be a need for this form of funding. There are always going to be small and medium enterprises that are looking for financial support, all in the form of SEIS and the investors that are a part of this scheme.

The hope for those in the UK is that Brexit will mean that these possible investors will look closer to home to invest in their money, rather than perhaps putting it abroad. This would be a definite positive. However, there is also a chance that some of these key investors will take their business entirely abroad and they won’t be in the UK to pass on their investments.

Time will tell what is going to happen with SEIS and the effects of Brexit. So, come November and December, it is simply going to be a case of watching this space.

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