As we wait to see what our Chancellor pulls out of his budget box this afternoon, we can assume he won’t be giving us any tax back. But we can still reduce our tax bill for 2017/18 before it becomes due next 31 January.
Both the Enterprise Investment Scheme (EIS) & Seed Enterprise Investment Scheme (SEIS) offer the option to ‘carry back’ tax reliefs into a previous tax year if the investor’s EIS or SEIS allowance has not been fully utilised – which maximises the reliefs available but also speeds up receiving the benefit even if the additional allowance is not required.
Both schemes require a certificate from HMRC (an ‘EIS3’ or a ‘SEIS3’) in order to claim the tax reliefs. The timing of receiving this certificate impacts when reliefs can be claimed – either reducing a tax liability before it becomes payable, directly claiming a refund for tax already paid or claiming a repayment on the back of a self-assessment submission. The processing of the certificates usually takes HMRC 3 or 4 weeks but is at their discretion, therefore the timings cannot be guaranteed.
This graphic illustrates three common scenarios and the potential timings – just on the income tax relief. But the most pertinent is the first – invest within the next few weeks and it should be possible to claim net off the tax reliefs in your 2017/18 self-assessment and reduce the tax liability before becomes due for payment. S/EIS investing should be done only after professional advice is taken and tax benefits can vary according to individual circumstances.