In the Chancellor’s recent Autumn Statement he confirmed a number of new tax breaks for business investors which will take effect from April 2012.

First, a new Seed Enterprise Investment Scheme (SEIS) will be introduced to complement the existing Enterprise Investment Scheme (EIS) for companies with net assets of no more than £200,000. The total investment in an SEIS is restricted to £150,000 per start up company. It should be noted that such investments are high risk and this should be factored in to any decision made by a potential investor attracted by the high tax relief available.

The tax benefits of SEIS are that an investor will receive a tax credit equal to 50% of the investment made regardless of his or her marginal rate of income tax i.e. 20%, 40% or 50%. Furthermore, there will be a one-off permanent capital gains tax exemption for those individuals who make gains in the tax year 2012-2013. This means that in practice there will be aggregate tax relief of up to 78% for an investment in SEIS. It should be noted, however, that there is a cap on such investment of £100,000 per tax year.

In contrast an investment in EIS affords tax relief of 30% and deferral of tax payable on capital gains up to the amount of investment.

Secondly, 100% capital allowances (tax depreciation) are to be introduced for expenditure incurred on plant and machinery between April 2010 and April 2017 in certain enterprise zones: Black Country (being most of the four Metropolitan District Council areas of Dudley, Sandwell, Walsall and Wolverhampton), Humber, Liverpool, North Eastern, Sheffield and Tees Valley (Middlesbrough and surrounding areas).

Finally, the small business rates relief holiday is to be extended by a further six months from 1 October 2012. The Government will also give business the opportunity to defer 60% of the increase in such rates as a result of RPI (indexation) to be repaid over the following two years: 2013-2014 and 2014-2015.