This presentation talks about the key areas of raising finance including all the relevant reliefs such as SEIS, EIS and Entrepreneurs Relief for exit.

1. KEY TAX ASPECTS OF RAISING FINANCE
INVEST PROFIT
TAX
SAVINGS

2. Nicholas Charles FCCA
Qualified accountant who joined C Charles & Co in
September 2003.
Recognised as a Fellow Chartered Certified Accountant in
May 2009
Property tax expert and a consultant on niche tax strategies
and planning for high net worth clients
Owns and runs a multi million pound property portfolio
Chairman of Penny Power Limited and FD of Bank to The
Future.
Property consultant and have brokered commercial
property deals worth more than £4m

3. AGENDA
To keep you awake!
To make you aware of the key areas of tax that can save
you and your businesses money.
EXIT: Entrepreneurs Relief
SEIS – Seed Enterprise Investment Scheme
EIS – Enterprise Investment Scheme
SEIS vs. EIS
Q&A

4. Entrepreneurs’ Relief
• 10% Tax on gains from sale of up to £10m!
• Only applicable to individuals and trusts NOT TO COMPANIES
• Lifetime allowance
• Applies to part disposal of business also
 Vendor must sell “part of his business”
 HMRC will assess to see if the purchaser can operate part
purchase as a going concern
 No ER on disposal of business assets – unless they can be
operated as a business in the own right

5. ENTREPRENEURS RELIEF - Conditions
TYPE OF BUSINESS ASSET CONDITIONS
The whole or part of business Owned by the disposer throughout a period of
at least 1 yr ending with the date of disposal
(or cessation of trade).
An asset used for the purpose of a 1. The business was owned by the disposer
business at the time the trade ceased for a time period as indicated above AND
2. The asset is disposed of on or within 3 yrs
after the date of cessation
Shares or securities in a trading 1. The seller owns at least 5% of the
company which continues to trade company’s voting share capital AND
after the disposal 2. The seller was an officer or employee of
the company.
Shares or securities in a trading As above BUT
company which ceases to trade. • The disposal must take place on or within 3
years after the date of cessation.

6. ER – Some Examples
SCENARIO ER Relief?
1. Trading partnership sells it’s car park to a property NO
developer
2. Sole trader food business sells one supplier lines YES – after
including customer database, goodwill and trademarks court case
3. Sale of a building that was rented to your personal
company and your business continues to rent out the NO
property
4. Sale of a building whilst disposing of a qualifying YES –
shareholding in your company. provided you
were charging
rent at MV

7. SEIS: SEED ENTERPRISE INVESTMENT SCHEME
New legislation – introduced on 6 April 2012
Similar to EIS but targets early stage companies carrying on a
NEW business in a qualifying trade.
In Year 1: 6/4/2012 – 5/04/2013 any gains realised from the
disposal of assets that are invested through SEIS will be
EXEMPT CGT!
Tax Relief 50% or even 78% making the investment more
attractive for investors.

8. SEIS – Investor Summary
Investor gets 50% income tax relief but NO tax rebate
Maximum of £100,000 of investment
Shares must be subscribed for (i.e. new shares) and paid up
in full in cash. Beware of newly registered companies
In YEAR 1 only can reinvest a chargeable gain incurred in
2012/13 into a SEIS qualifying company. Subject to
maximum investors gain will be exempt (saving 28%) AND
will also qualify for 50% income tax relief!
Investor cannot be an employee but can be a director!
Shares also exempt from CGT if held for 3 qualifying years

9. SEIS – Investor Summary 2
Investor cannot own > 30% of the company shares.
30% includes relatives and business partners but not brothers and sisters
Shares MUST be full risk ordinary shares – preference shares will NOT qualify.
HMRC will not issue a compliance certificate until Finance Act has been given
Royal Assent!
Example 2012/13 £ £
Matt’s Chargeable gains subject to 28% CGT 60,000
Matt’s income tax liability 97,000
Matt invests £60,000 into SEIS shares @ 50% 30,000
Net tax liability 47,000
TOTAL TAX SAVED: (60,000 x 28%) + 30,000 46,800
ACTUAL COST OF £60,000 INVESTMENT 13,200

10. SEIS – COMPANY SUMMARY
AT THE TIME SHARES ARE ISSUED:
• Must not have > 25 employees
• Gross assets must be < £200,000 – this applies to group assets if
company belongs to a group.
• NO EIS or VCT investment must have been made by issuing
company
• Any trade carried on by company must be < 2 years old at the
date of issue of shares
• Maximum of £150,000 can be raised
For full details please visit: http://
www.hmrc.gov.uk/seedeis/index.htm

11. SEIS – Commercial Considerations
If you are starting a new “trade” or company you MUST
consider SEIS if looking to raise money.
Make sure company qualifies!
SEIS company investments are potentially 78% cheaper
Combine SEIS with EIS or VCT. However you must spend
70% of monies raised by the SEIS before you can do so
Therefore raise £150,000 with SEIS and then look to raise
additional finance via either EIS or VCT.

12. EIS – Enterprise Investment Scheme
INVESTOR:
Must invest a minimum £500
Income tax relief = 30% of the cost of shares
Max tax relief = £150,000 on a £500,000 investment
Can carry back relief to preceding tax year If qualifying shares are held for > 3
years then any gain is free from CGT
If shares are NOT held for 3 years then Income tax relief is withdrawn.
Loss relief is available if shares are sold at a loss
Can defer Capital Gains Tax if gain is invested in shares of an EIS qualifying
company – NO LIMIT!

13. EIS – Connection to Company
An investor is “connected” if 2 years before share issue or 3
years after share issue:
1. Investor controls > 30% of the share capital
2. Shareholdings held by “associates” are also taken into
account.
3. Investor is or becomes a partner, director or employee of
the company. This does NOT apply to Business Angels.
EXAMPLE:
Mr X purchases 10% of EIS share capital in Yr 1 and then
21% in Yr 2. There will be no relief in Yr 2 AND he will
have to repay the Yr 1 tax relief claimed.

14. EIS – Connection to Company
ITEM Unconnected Connected
Income Tax Relief on subscriptions Yes No
Capital Gains Exemption on disposal of Yes No
shares eligible for income tax relief
Loss Relief on disposal of shares disposed Yes Yes
of at a loss
Capital Gains Deferral (Unlimited) Yes Yes

15. EIS – Company Considerations
Company can raise £2m in any Non Trading Activities
12 month period
Dealings in land
Small Company Enterprise
Centre decides if company Financial activities incl. banking
qualifies for EIS relief.
Leasing assets
Qualifying companies will have
to supply form EIS3 to investors Property Development
so that they can claim relief.
Operating or managing hotels
Money MUST be used within 2
yrs of share issue for the Operating nursing homes
purposes of trade or R&D
Legal or accountancy services
Company cannot be involved in
“non trading activities” Excluded activities must not be >
20% of the companies activities.

16. SEIS vs. EIS
STATEMENT SEIS EIS
Maximum amount that can be raised? £150,000 £2m
Amount of tax Relief in 2012/13? 50%/78% 30%
Can you carry back relief? Yes but not Yes
in 12/13
What happens if you reinvest capital gains Exempt – Deferral –
up to limit No Limit
CGT on sale of shares if held > 3 years No No
Maximum % of voting shares held including 30% 30%
associates?

17. FURTHER INFORMATION
www.charlesfcca.com 020 7263 3295
EIS: Small Company Enterprise Centre (Admin team)
South Wing
1st Floor, Fitzroy House
Castle Meadow Road
Nottingham NG2 1BD
0115 974 1250

18. WITH ACTION COMES RESULTS
LEARN TO ASK THE RIGHT QUESTIONS TO YOUR ADVISORS
1. Does your company qualify for SEIS or EIS?
2. Are you looking to sell whole or part of your business? If so will your gain
qualify for ER?
3. Is your business set up in the most tax efficient way?
4. Do you have any overseas operations and if so do you need to setup an offshore
company?
5. What tax strategies/planning are available for your business TODAY?