Venture capital scheme
Enterprise Investment Scheme (EIS)
The Enterprise Investment Scheme is a tax advantaged scheme designed to help companies that are at their early growth stage to raise equity finance from investors. Through this scheme, qualifying investors are able to claim income tax relief of 30%, plus exemption from capital gains tax when enterprise investment scheme shares are disposed of.[23]
Seed Enterprise Investment Scheme (SEIS)
The Seed Enterprise Investment Scheme is a tax advantaged scheme designed to encourage investment from investor in higher-risk small companies that are in their early growth stage to raise equity finance. With contrast the existing Enterprise Investment Scheme (EIS), the SEIS allows qualifying investors can claim income tax relief of 50%, plus capital gains tax relief.[24]
Venture Capital Trust (VCT)
The Venture Capital Trust Scheme is a tax advantaged scheme designed for a HMRC-Approved VCT company to chip in for shares in, lends money to small unquoted companies. Under scheme, the VCT companies itself exempt from CT on chargeable gains and their investors can claim income tax relief on subscriptions of up to £200,000.[25]
Enterprise Investment Scheme (EIS)
The Enterprise Investment Scheme is a tax advantaged scheme designed to help companies that are at their early growth stage to raise equity finance from investors. Through this scheme, qualifying investors are able to claim income tax relief of 30%, plus exemption from capital gains tax when enterprise investment scheme shares are disposed of.[23]
Seed Enterprise Investment Scheme (SEIS)
The Seed Enterprise Investment Scheme is a tax advantaged scheme designed to encourage investment from investor in higher-risk small companies that are in their early growth stage to raise equity finance. With contrast the existing Enterprise Investment Scheme (EIS), the SEIS allows qualifying investors can claim income tax relief of 50%, plus capital gains tax relief.[24]
Venture Capital Trust (VCT)
The Venture Capital Trust Scheme is a tax advantaged scheme designed for a HMRC-Approved VCT company to chip in for shares in, lends money to small unquoted companies. Under scheme, the VCT companies itself exempt from CT on chargeable gains and their investors can claim income tax relief on subscriptions of up to £200,000.[25]
Social investment tax relief
Social investment tax relief scheme is designed to encourage more social investments from investors to support social enterprise by introducing a range of tax relief schemes such as Income Tax relief, capital gains hold-over relief and capital gains disposal relief. SITR covers investments made on or after 6 April 2014.[26] It means that debt investments into asset-locked bodies (like community interest companies) can now be made on the same tax relief terms as the Enterprise Investment Scheme for equity investments.
Income tax relief
Investors (need not to be UK resident) who subscribed to qualifying shares or make qualifying debt investments in the social enterprise that meet SITR requirement, are able to calm at 30% of the amount they invested, to a maximum investment of £1,000,000 up to 5 years after the 31 January following the tax year in which the investment was made.[27]
Capital gains hold-over relief
Investors are able to defer the payment of tax on a capital gain of any kind of disposed asset, when the capital gains are reinvested in the share or debt investment which qualify for SITR Income Tax Relief.
Income tax relief
Investors (need not to be UK resident) who subscribed to qualifying shares or make qualifying debt investments in the social enterprise that meet SITR requirement, are able to calm at 30% of the amount they invested, to a maximum investment of £1,000,000 up to 5 years after the 31 January following the tax year in which the investment was made.[27]
Capital gains hold-over relief
Investors are able to defer the payment of tax on a capital gain of any kind of disposed asset, when the capital gains are reinvested in the share or debt investment which qualify for SITR Income Tax Relief. However, it must arise in the period from 6 April 2014 to 5 April 2019. The SITR qualifying investment must be made in the period one year before or three years after the gain arose.[28]
Capital gains disposal relief
Any gain on the investment that is disposed after it has been held for at least three years, are free from Capital Gain Tax, in addition to the Income Tax Relief coverage on the cost of the investment.[29]
Alternatives funding
Business angels/angel finance
Business angels are usually a group/single individual investors with a high-net-worth pool of investments looking for opportunities to invest in an enterprise, to achieve a reasonable amount on return of investment. As business angel funding involves investors injecting funds into a startup/private company in return for a share in its ownership, businesses that operate as sole traders or partnerships are usually not eligible for such financing.[30]
Crowdsourcing
Crowdsourcing is a practice of funding a project or venture by raising monetary contributions from a large number of people, typically via the internet. For-profit fundraising companies using strategies such to charge a premium on "keep what you raise” model or minor charges on an "all-or-nothing funding approach" [31] However, particularly for Social Crowdsourcing, non-profit organization such as razoo to help social enterprise or non-profit, student organization to raise fund for event or charitable causes.[32]
Business angels/angel finance
Business angels are usually a group/single individual investors with a high-net-worth pool of investments looking for opportunities to invest in an enterprise, to achieve a reasonable amount on return of investment. As business angel funding involves investors injecting funds into a startup/private company in return for a share in its ownership, businesses that operate as sole traders or partnerships are usually not eligible for such financing.[30]
Crowdsourcing
Crowdsourcing is a practice of funding a project or venture by raising monetary contributions from a large number of people, typically via the internet. For-profit fundraising companies using strategies such to charge a premium on "keep what you raise” model or minor charges on an "all-or-nothing funding approach" [31] However, particularly for Social Crowdsourcing, non-profit organization such as razoo to help social enterprise or non-profit, student organization to raise fund for event or charitable causes.[32]
