The chancellor announced earlier today that the Pension contribution allowance for people earning over £150,000 is being reduced from £40,000 to £10,000 with the headline overall allowance remaining at £1.25 million until 6 July 2016 when it is then reduced to £1 million.
Although this is in part paying for the increase in the inheritance tax threshold it really does put SEIS & EIS schemes in the spotlight. As part of a balanced investment portfolio and to maximise an individual’s tax allowance IFAs, accountants and wealth managers are now even more encouraged to explore the world previously left to the more entrepreneurial.
The tax breaks are well documented with 50% income tax relief on SEIS & 30% on EIS qualifying-companies but the question is how do I ask my advisor what is the best way to get involved ? A lot depends on how much people want to be involved with their investments and what industries or sectors they want exposure to. One is still predominately investing in venture and growth stage businesses, so a number will fail BUT with the tax breaks in place, good advisors and quality management teams these failures can be minimised.
There are a number of large funds in the market which give broad exposure to a number of sectors and as each investment is made you fill in your subscription documentation and send it to your accountant or the HMRC. Another way is to go for a more focused approach and select an individual company that is either SEIS / EIS qualifying in a sector that you feel is likely to grow and has the opportunity to eventually list or be acquired. There are also specialised, sector focussed funds available.