Is the Seed Enterprise Investment Scheme the answer for expat investments

Published:  20 May at 6 PM
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Tagged: UK, Euro, England
As one after another offshore bank closes down and onshore interest rates continue to lurk well below inflation in most expat havens, is the SEIS the answer to diminishing returns?

The Seed Enterprise Investment Scheme (SEIS), offers attractive tax relief options for expats who are still regarded as tax-resident in the UK, but is it secure enough to serve as a replacement for term deposits? Investors get tax breaks both when they place their investment and when its three year term comes to an end, but it’s important to know whether the company has HMRC approval.

Companies are not forced to seek HMRC approval in advance for their scheme, but the authority’s compliance rules are strict, and may not become apparent until SEIS shares are released and an application filed. The green light for investors only comes when HMRC gives its approval, and would-be investors who’ve taken the entrepreneurial word on the scheme may get an unpleasant shock.

New companies need to submit full details and business proposals to the authority in writing, and would-be investors aren’t forced to state their interest until approval has been given. The process is known as Advanced Assurance, has to be initiated by the company itself and, if details are changed after application, the company must start the procedure over again.

Advance Assurance does not reveal the names of interested parties in the share issue, nor does it guarantee tax relief to the investor, but given the innovative nature of the scheme, HRMC are taking care to ensure it’s as safe as it can be giving the chancy nature of innovation, new products and new ideas. Cautious investors may well regard it as a gamble, but the rewards can be high if the product takes off in its marketplace.
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