Chancellor George Osborne has announced capital gains tax relief for the seed enterprise investment scheme will be extended for an additional two years to 2014/15, but the level of relief will halve.

In 2011, the Government announced it would offer 100 per cent capital gains tax relief on gains realised in the SEIS in the 2012/13 tax year and reinvested in the scheme in the same year.

In his Budget speech today, the chancellor said he plans to provide 50 per cent relief against CGT chargeable on gains realised in 2013/14 which are reinvested in the SEIS in 2013/14 or 2014/15.

SEIS offers tax relief to investors in smaller, higher-risk companies, in order to help these enterprises raise finance.

Osborne said: “Our Seed Enterprise Investment Scheme offers generous incentives to investors in start ups. My honourable friend for Braintree and David Young have done a great job helping promote it around the country. They have asked me to extend the CGT holiday and I will.”

Seed Mentors founder Harvey Shulman, who runs the Seed EIS Fund One, says: “The extension of the CGT deferral means the potential tax relief available on SEIS investments remains incredibly attractive.

“This means Seed EIS will continue to offer unbeatable tax reliefs and represent an on-going opportunity for investors to back start-ups and be well-rewarded for doing so with the potential for an extremely attractive return on their money.”

However Kuber Ventures managing partner John Williams says: “The extension of the capital gains tax relief for SEIS was signalled by the chancellor as a victory for small businesses, but, while many will appreciate the sentiment, the fact that the relief has been cut by 50 per cent will have dampened spirits slightly.”

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