Growth capital—tax reliefs available to managers
Growth capital—tax reliefs available to managers

The following Tax guidance note provides comprehensive and up to date legal information covering:

  • Growth capital—tax reliefs available to managers
  • Growth capital—seed, venture and development capital
  • Interest relief on borrowing
  • Conditions relating to the status of the company
  • Conditions relating to the nature of the loan
  • Conditions relating to the relationship between the manager and the company
  • Seed Enterprise Investment Scheme (SEIS)
  • Enterprise investment scheme (EIS)
  • Business asset disposal relief (formerly entrepreneurs’ relief
  • Cap on unlimited income tax reliefs

This Practice Note summarises the key UK tax reliefs available to key individuals running a company that is seeking growth (ie seed, venture and development) capital.

The founders, owners, directors and key managers (who in many cases may be the same people) of a company seeking growth capital will usually hold shares in the company. These may be held prior to the investment or may be a condition of the investment imposed by investors—investors will usually provide growth capital through a series of funding rounds and will usually require key individuals involved in the business (referred to collectively in this practice note as managers) to participate in the funding rounds by subscribing for shares in the company.

This Practice Note considers the key UK tax reliefs that may be available to UK managers, including:

  1. interest relief on borrowing

  2. relief under the seed enterprise investment scheme

  3. relief under the enterprise investment scheme

It does not consider social investment tax relief, for which, see the relevant further reading link: Outline of relief for social investments: Simon’s Taxes [E3.901].

It also does not consider the availability of relief under specific share option schemes such as via company share option plans (CSOPs) and enterprise management incentives (EMI) schemes. For more information on employee share schemes, see Practice Note: Introduction to employee share ownership schemes.

For an analysis