Although Crowd2Fund is predominantly a debt based crowdfunding platform, we may offer equity investments from time to time. Equity investment is a very different investment type to debt and should be made with full understanding of how equity works. Equity investments have their own tax schemes called the 'Seed Enterprise Investment Scheme' for new businesses and the 'Enterprise investment Scheme' for more established businesses. Due to equity investments longer term and higher risk nature, the tax incentives can be very generous, depending on your personal circumstances.
We always recommend that you consult a registered finance or tax advisor for guidance the tax requirements on your investments, in addition to consulting HMRC.
To support a thriving entrepreneurial economy and encourage UK taxpayers to invest in eligible new and growing businesses, Her Majesty's Revenue and Customs offer two different tax-break schemes.
The schemes offer tax incentives on the amount invested and tax deductions for any losses. As long as the investment is held for a minimum of 3 years, profits are exempt from capital gains taxes.
All UK taxpayers are eligible to take advantage of the Seed Enterprise Investment Scheme (SEIS) and the Enterprise Investment Scheme (EIS). As previously mentioned, SEIS is limited to very early-stage businesses, whilst EIS businesses will be slightly more mature.
All SEIS and EIS investments on Crowd2Fund are clearly labelled on the relevant campaigns on the Crowd2Fund platform.
In addition to beneficial tax treatment of your SEIS or EIS investments, these schemes can be used to defer a tax liability from conventional investments. Capital gains from other investments realised can be shielded from capital gains taxes if rolled into an EIS or SEIS eligible investment within 12 months.
As with any investment, income (dividends or capital gains) from such investments must be declared on your personal tax return. PAYE investors who are taxed at source may be able to complete tax returns and claim back tax deductions retrospectively.
Seed Enterprise Investment Scheme (SEIS)
With SEIS-eligible campaigns, 50% of the investment can be credited against the investor’s tax payable in that tax year. Capital gains are exempt if the investment is held for at least 3 years.
Any losses can be deducted net of prior deductions. SEIS businesses can raise up to £150,000. Investors have a personal investment limit of up to £100,000 per tax year.
Enterprise Investment Scheme (EIS)
With EIS-eligible campaigns, 30% of an investment made into can be credited against the investor’s tax payable in that tax year.
Capital gains are exempt if the investment is held for at least 3 years. Any losses can be deducted net of prior deductions. EIS businesses can raise up to £5,000,000. Investors have a personal investment limit of up to £1,000,000 per tax year.
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The above information is for informational purposes only. The individual circumstances of investors can vary, and the terms of each scheme are subject to change. For full details of any tax schemes, please refer to HMRC directly or contact your personal financial advisor or tax advisor.