EIS, SEIS and now investors’ relief!

The aim of investors’ relief is to attract new investment into unlisted companies. The legislation is still not final but amendments have been made to extend the relief to employees and unpaid directors in some circumstances.

So a business angel and those not employees at the time of investment but later became employees should benefit provided it was not contemplated that they would become employees at the time of the investment.

The trap still apparent is that an unconnected, non-employee shareholder subscribing for 2% of the shares can qualify for 10% tax rate on sale, but an employee in the same circumstance is precluded from investors’ relief and cannot qualify for entrepreneur’s relief.