Islanders might be able to get tax-breaks for investing in small start-up businesses under proposals that business lobby groups are discussing with the Treasury department.
The Institute of Directors says that the scheme would help encourage investment in local businesses, giving them more money to expand, hire more staff and develop new products and services - and the group's local Chairman says that both they and the Chamber of Commerce have been talking to the Treasury about trying it out.
IoD Chairman Jason Laity says that there is a local investor community that would be prepared to put their own money into Island firms if they were offered a tax incentive for doing so. In the UK, a similar project called the Seed Enterprise Investment Scheme (SEIS) scheme has raised over £82 million for more than 1,000 companies.
He said: “It’s an idea we have been chipping away at for some time – originally it was quite widely drawn but recently we’ve talked about limiting it to smaller start-up companies like the SEIS scheme in the UK.
“We believe that this could provide small local start-ups with access to capital from the local investor community who could be attracted by the tax relief. We’ve had some receptive conversations recently with the Treasury department, and we believe that it might be particularly useful for the digital sector. It would of course need to be ‘policed’ but as the investors would need to disclose the investment to get the tax relief, and the company will have to file a tax return, hopefully this shouldn’t be too difficult.”
The UK's SEIS scheme offers a 50% tax relief in the year the investment is made, but has safeguards built into it to stop abuse. People who want to use a scheme are limited to a £100,000 investment in a year, and a company can only raise £150,000 in a year. In addition, the companies eligible for SEIS funding must: be UK companies with a permanent UK establishment, have fewer than 25 employees, be no more than two years old, have assets of less than £200,000 and be in an approved sector (generally not finance or investment).
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